For Immediate Release

Friday, September 1st 1995

Contact: Mark Cuban
AudioNet
Direct:214-696-3320

[Dallas]…AudioNet, the world’s first audio network on the Internet, and KLIF 570AM, Dallas, are pleased to announce that on September 1st, 1995, KLIF became the first radio station in the world to begin broadcasting their original programming simultaneously over the air, and over the Internet.

Beginning with the broadcast of the Southern Methodist University Mustangs vs. the Arkansas Razorbacks college football game from the Cotton Bowl in Dallas, KLIF and AudioNet created history. Using Real Audio technology developed by Progressive Networks, along with networking and integration software designed and developed by AudioNet, the world’s first college football game simulnetcast was a complete success, coming off without a hitch.

“We were extremely pleased with the performance of the Real Audio software, as well as our own AudioNet software. We expected to run into a few glitches, but the support of the Progessive Network engineers, as well as our own teams, pulled the entire event off without any interruptions. More importantly we have been able to offer KLIF original programming, uninterrupted since that time”, said Mark Cuban, President of AudioNet.

“We are very pleased not only to be the first station broadcast on the Internet, but also to extend the reach of KLIF to many new listeners . The response of our listeners has been extermely favorable, as has the support of AudioNet,” said Dan Halyburton, Vice President/General Manager for KLIF.

Users wishing to listen to KLIF on AudioNet can point their web browsers to:

WWW.AUDIONET.COM

AudioNet

Internet Firsts !

For Immediate Release

Monday, September 5th 1995

Contact: Mark Cuban
AudioNet
Direct:214-696-3320

[Dallas]…AudioNet, the worlds first audio network on the Internet, is pleased to announce a number of Internet firsts. AudioNet was the first to provide realtime audio presentation of:

]]>http://blogmaverick.com/2015/01/16/the-worlds-first-streaming-radio-station-and-first-live-sporting-event-on-the-net/feed/11markcubanhttp://blogmaverick.com/2015/01/16/the-worlds-first-streaming-radio-station-and-first-live-sporting-event-on-the-net/Is this a proposal from 1995 or 2015 ?http://feedproxy.google.com/~r/mavsblogmaverick/~3/0n7ZU4f6Zu8/
http://blogmaverick.com/2015/01/16/is-this-a-proposal-from-1995-or-2015/#commentsFri, 16 Jan 2015 05:47:17 +0000http://blogmaverick.com/?p=2262]]>I had reason to do some research and find some old goodies from the beginning of the world of streaming. This was first written in 1995 with testimonial emails added over time.

Since 2015 marks the 20th Anniversary year of streaming, i thought it would be fun for you to see that our proposals from back then aren’t a whole lot different from what we see in proposals today. The technology has improved. The market has changed. The proposition. Not so much. Ok maybe I had to explain what the Internet is and that’s not necessary today. But why nitpick :)

Notice towards the end the offer of pre stream ads. Tags. Inserted commercials and more.

Who is AudioNet ?

AudioNet is the worlds first and largest Broadcast Network on the Internet, that’s who. We are just like your local cable company. The cable company licenses programming from about 100 different sources and offers a choice of about 50 to 75 television channels to its local trade market, or in some cases they will share content among several markets.. AudioNet licenses audio programming from hundreds of sources, and makes it available to the ENTIRE WORLD ! Better yet, unlike radio and television, we offer programming on demand. If you miss your favorite program during the day, you can listen to it on AudioNet that night ! With AudioNet, no one ever has to miss their favorite program or show !

AudioNet is one of the most popular destinations on the Internet. People around the world know that when they want their choice of LIVE and on demand audio programming there is only place to go, WWW.Audionet.Com, the worlds first Broadcast Network on the Internet !

AudioNet offers live broadcasts of radio stations such as KLIF Dallas, WTEM Washington DC, WMVP Chicago, KFI Los Angeles, KDGE Dallas, XTRA San Diego, WQAM Miami, WOR New York, WBAL Baltimore, KDGE Dallas, KZPS Dallas,WAMC New York, with many more to come. Then there are the LIVE broadcasts of exciting sporting events such as football and men’s and women’s basketball from more than 50 schools including, Texas A&M, University of Southern California, Michigan State, Nebraska, Baylor, North Carolina, Duke, and Florida. Plus, a growing schedule of professional football, baseball, basketball, lacrosse, hockey, and Indoor Soccer.

In addition to sports programming AudioNet offers a comprehensive selection of entertaining, original programming not available anywhere else, like NetChat with Elliot Stein, Live Music Concerts, Hash Brown Blues Band Live from the Bone, The Janice Malone Show, Science Radio, The Worlds First Serialized Audio Books, Jeffrey Lyons Movie Reviews and Hollywood Reports, Medical Matters, Tech Talk, NetRadio, Geek Free Radio, Legal Matters, Net Radio, Celebrity Interviews with Michelle Pfeiffer, Patrick Swayze, Dustin Hoffman, George Foreman, Gennifer Flowers and much more. What’s even more exciting is that AudioNet is doubling their content offerings every month, with new things being added every day. Listeners know to stop by and see what’s new, and they do !

That’s right, AudioNet offers our users their choice of the programming they want and love, and its only on AudioNet!

What is the Internet ?

Everybody has used the phone system. Pick up the phone, dial a number, talk to a friend or business associate. What we don’t think about when we pick up the phone is what actually happens at the phone company.

When you dial a phone number, the phone company takes that number, and using their complex internetwork of computers, switches, and lots of fancy technology, they connect your phone to your friends’ phone.

So what is the Internet ? The Internet is the phone system, but instead of all of those fancy computers at the phone company being used to connect phones for people to talk on, they connect computers so that they can talk to each other. Its real simple. The Internet is just a bunch of computers that have the ability to hold a conversation with each other.

People talk to each other and communicate using words. Computers talk to each using text, pictures, audio and in some cases video. That is what makes the Internet so special. When you connect your computer to the Internet you have access to millions and billions of words, pictures and sounds that you might not be able to find otherwise. Just as importantly, anybody who uses the Internet has access to whatever words, pictures or sounds you would like to make available to them !

So what does it take to “Get On the Internet ?” Its simple. All you need is a multimedia computer, a modem, and a connection to an Internet Service Provider.

An Internet Service Provider is someone who has gone to the phone company and told them that they want to specialize in allowing computers to connect to other computers. So they cut a deal that allows them to share high speed connections to other computers among all the people’s computers that they provide Internet Services to. This is not much different than Sprint and MCI, who bought tons of phone time from AT&T and turned around an specialized in selling long distance. Internet Service Providers specialize in selling computer access to the Internet.

To sign up for a connection to an Internet Service Provider usually only takes a single phone call to the Internet Service Provider, or AS AN AUDIONET CUSTOMER OR CONTENT PARTNER, we will do all of this for you !

What else do you need ? The only other thing you need is software known as Browser Software. This software, which we provide to you allows your computer to easily navigate all of the different computers on the Internet and display all of the sights, sounds and information available from the millions of computers connected to the net.

So what exactly is on the Net and why is everybody so excited ? Everything is on the net. That’s right, everything. There is not a single subject that isn’t covered. Want information on the Mona Lisa, do a search on the Mona Lisa, or Art, or Leonardo Da Vinci . Want to know the score of Army vs USC in 1973, no sweat its there. Want to review the latest fashions from Milan, its there. Want to know who is hiring in your field ? Demographics of skateboards in Delaware ?You can even find the menus of some of your favorite restaurants. Everyday more is being added. Experts are saying that the Internet will double in size in less than a year ! There is little question that when anyone wants personal or business information, the Internet will be the first place they start to look. The only question is whether they will find information about your business when they start to look, or will they find information about your competition !

AudioNet and the Future

The only constant with technology is change. Each and everyday technology advances to allow new things that no one ever dreamed of to be done. For AudioNet, technological change is opportunity for our customers and listeners. You see, AudioNet is technology independent. We will always be able to chose the technology that best serves our users. We will use other’s technology, and combine it with our own. We will give our customers a truly competitive advantage by staying on the cutting edge, but away from the bleeding edge, using technology to do things others cant imagine.

Today AudioNet is an Audio only network. We expect the bandwidth available to the home to increase dramatically over the next 2 to 4 years . We expect to be able to expand our offerings to include not only video, but also other new media images and formats, some of which are just now being invented !

What makes AudioNet special, is not only our technological independence and experience, but also our commitment to our customers and users. We will take your suggestions, and comments and use them to continuously upgrade the level of entertainment that we offer. We expect to have customized versions of AudioNet, so that the way you use AudioNet, is unique to you !

In terms of our breadth of reach, AudioNet currently serves more than 750,000 listeners per month. We expect that number to grow exponentially to more than 5,000,000 listeners per month, in LESS THAN 12 MONTHS. In fact, we expect that within 18 months, we will be the equivalent of the largest radio station in world !

WHAT BUSINESS ARE YOU IN ?
Today, you are in the business of managing change. More than ever before, your business is driven by constant, relentless change in new products, revisions in services, changes in distribution, new suppliers, increasing competition…
Your customers and prospects are changing even faster! Shifting purchasing behavior, major lifestyle adjustments, changes in product preferences, new perceptions of value….
Your strongest competitors are changing too! Constantly adjusting to keep up with variable conditions, struggling to persevere in an increasingly hostile marketplace, continually striving to increase market share….
So, if you plan to see your business grow and prosper … you constantly need to enhance your ability to manage change. You need to access the current situation, understand the options, explore the alternatives, and be prepared to change your business strategy and marketing tactics at a moment’s notice.
You can’t do it alone. You need a contemporary marketing partner that’s ready and able to help you maximize each and every sales opportunity…from short-term events to emerging long-term trends. AudioNet is that partner !
AudioNet is not just another Internet Company. AudioNet is the established market leader for multimedia on the Internet. While other companies attempting to understand technology and marketing through new media, AudioNet is creating the market and establishing itself as the leader others are following.
AudioNet knows how to take technology and use it to your advantage. We can support you in traditional means, by offering cost effect impressions to your targeted customer base. Or, we can leverage our technological and marketing advantages, to give you a competitive advantage in your marketplace !

Why Offer Your Content on AudioNet ?

YOU want to maximize the reach of your content.
YOU want complete flexibility in the information you offer to listeners and customers.
YOU want to offer your customers the ONLY truly interactive medium.
YOU want to be able to change your messages to your listeners and customers dynamically.
YOU want to acquire complete demographics of your listeners and customers in REAL-TIME !
YOU want to reach every possible prospect or customer in your demographics.
YOU want to talk to listeners, prospects and customers worldwide.
YOU need to pinpoint specific consumers by name for products and services.
YOU have to maximize your investment by reaching your best prospects .
YOU need to break through competitive clutter .
YOU want to establish a relationship with your customers.
YOU want to make the most of your entire broadcast program .
YOU need to respond to changes in the market at a moment’s notice.
YOU constantly are looking for new ways to impact the market .
YOU want to allow your listeners and customers the convenience of using the Internet.
YOU want to offer your customers an extended impression of information
YOU want to build a direct SnailMail and Electronic Mail mailing lists.
YOU want to participate in a medium whose reach is doubling every 3 months !
YOU want to entertain your listeners and customers with your message.
YOU want to establish yourself as a marketing leader.

The AudioNet JukeBox
The world it is a changing. Today, the computer is a normal appliance in the life of almost every student throughout the Western World. Along with the computer, comes access to the Internet. Today’s kids and young adults use the Internet almost as much as they watch today. In fact, the trend towards Internet usage is increasing, while the use of television among the young is decreasing. More importantly, internet users have a higher disposable income than television viewers. The question is, how do you most effectively reach this profitable audience. Enter the AudioNet JukeBox.

AudioNet, through its licenses with ASCAP and BMI, has created a JukeBox on AudioNet that offers users the chance to listen to their choice of more than 300 Cds, in their entirety. Although the JukeBox has been up and running only a matter of weeks, the response has been phenomenal.

Each day, more than 10,000 AudioNet users visit the JukeBox. With more than 8,000 choosing to listen to the CD of their choice. Plus, the base of JukeBox listeners is growing at more than 15% per week, with no slowdown in sight !

Our good fortune is your phenomenal opportunity. AudioNet is creating the opportunity for Music Companies, Distributors and Retailers to highlight their products through our AudioNet Pick of the Week.

The AudioNet Pick of the Week is a highlighted CD selection that is the first thing that JukeBox users see. As the Pick of the Week, your product will be seen by more than 10,000 potential customers each day.

Having so many potential listeners is a good thing, but the real question is, how many people will actually listen to the Pick of the Week ? Since our inception of the AudioNet JukeBox and the Pick of the Week, no CD has been listend to less than 400 times in a single day ! In fact the average is more than 500 per day ! Thats more than 3,500 people listening to your product each week !

In addition to your product being viewed and listened to by thousands each week, the AudioNet JukeBox Pick of the Week will contain a link back to your home page, or to a page we create, with information on how to purchase your product, whether from the closest retailer, or from a 1-800 number that you provide.

How To Participate in the AudioNet JukeBox

You will need to provide
Camera Ready Artwork for the Product to be highlighted
2 Copies of the CD to be highlighted
Either a link to a URL providing ordering information, or the layout for a page that will be hosted on Audionet

Long time listener, never time caller and ecstatic Audionet patron. I have
recently moved from Arlington to Tyler and could not receive the KLIF
signal inside my new place of employment. So simulcasting KLIF on the
Internet has filled my work time talk radio fix. I have been listening to
KLIF for seven years and watched KLIF grow and evolve into the
excellent station that it is today. The addition of the Internet service
proves that KLIF will remain on the cutting edge of the industry.
__________________________________________________________________________________
From: SpclAgnt007 <pfahey@iadfw.net> Date: Sun, 08 Oct 95 19:57:49 -700
To: webmaster@audionet.com
Subject: Best site in the Internet

I love you guys! Can’t wait for the other radio stations like the Fan.

AWESOME! I am truly impressed with this site that you have setup. It is
the cutting edge of technology with the live broadcasts. You guys have
implemented RealAudio well and it sounds great! KLeep up the great work!

This is one of the most incredible services available on the Net. The
Internet has truly revolutionized communications, but Internet radio
broadcasts will take the world into an entirely new era of worldwide
communication.

I’m from Texas. I’ve been living in Malaysia for the past 6 years. I
must say that being able to receive live broadcasts from KLIF has been
one of the most delightful things I have had happen to me lately. I
hope you keep it up and I am especially looking forward to the day
when I can listen to live Cowboy games on internet radio. Thanks
again!
——————————————————————
* Ted Targosz E-Mail: tedtarg@pop.jaring.my *
* SLIPing to you from Penang, Malaysia “The Pearl of the Orient” *
_____________________________________________________________________________________
From: rcassidy@MO.NET
Date: Sun, 24 Sep 1995 14:39:32 -0700
To: webmaster@audionet.com

Dear Sirs,

I really enjoy your programs. I listen while I do routine chores at
my computer several times each week. I felt it was time to let you
know that I am excited about the recent advancements in this area.
Keep up the good work.
_____________________________________________________________________________________

I just wanted to thank you very much for broadcasting the game today.
For fans like me who are isloated from watching or hearing their
favorite teams (in my case the Redskins all the way) over traditional
means, this is a wonderful service. I would encourage you to continue
this service (with the Skins if at all possible) and expand upon it.
Many favorable reguards.

With every good reason to quit, I played the realaudio sessions several
times to let the information sink in. It is indeed a valuable service
and I thank you for it. Keep up the good work, the files played
flawlessly.

One of my buddies from Oklahoma rushed over to my office when he heard
that the OU game was going to be on. We gathered around the audiovision Mac
monitor and had a great time listening to the play by play. The feed dropped
out a couple of times, but the audio quality was excellent and you guys have
done a nice job on the interface.

My question to you.
Are you willing to rent out your expertise to get other people in different
parts of the country on line? I don’t know why Cal and Stanford aren’t on
line, but they should be, and some of our local talk radio shows are big time
and should be running on the net. I am willing to pursue them, but I don’t
have the RA background to set them up.

Dave Roberts
dave@daveroberts.com

The AudioNet Program for Internet Advertising

Every advertiser has their choice of hundreds of different mediums in which to present their message.
Results from that message depend on where it is placed. AudioNet is the leading and largest Broadcast Network on the Internet.

Our live broadcasts of Sports and Talk Radio, cultural and entertainment events, as wellas collegiate and professional sporting events, offer advertisers the opportunity to interact with millions of Internet and online service users in a unique medium

When you advertise on AudioNet, you reach more of your targeted audience more often.

AudioNet serves more than 1 1/2 million Web pages a month.

Each day more than 15,000 listeners access AudioNet

The Number of users of AudioNet has been doubling every 3 weeks since our inception, with no signs of slowing

AudioNet listeners stay on the system for an average of more than 1 hour. The typical Web Site averages less than 2 minutes !

AudioNet content is Unique. No where else on the net will you find live Sports and Talk Radio, live cultural and entertainment, and live sporting events !

AudioNet has the largest catalog of On-Demand programming on the Net, with more than 2000 shows and events.

AudioNet is attracting new content everyday. Both listeners and content providers are flocking to be part of the AudioNet phenomena ! From sports to talk radio, from Jeffrey Lyons Movie Reviews, to Medical Matters, to The Janice Malone Show. AudioNet offers a unique mix of live and on-demand programming that attracts veteran and newbie online users !

Targeting Your Market with AudioNet

AudioNet offers a wide range of entertainment opportunities for our users. Each of which reachs a very targeted market. Other Internet concerns can only offer a large number of “hits”. AudioNet programming, can offer our advertisers a selection of very targeted, definable target markets.

AudioNet program directories are organized in a hierarchy of categories. Sports, Talk Radio, Music, Interviews, New Programs, Live !, Live Football, Live Basketball, Hot Programs and Specialty Programs, are some of the primary headings which lead into mulitple topics within each heading.

Each topic, such as Coaches Shows, Talk Shows, Celebrity Interviews, Medical Shows, etc, contains the programming specific to that topic. This well defined hierarchy allows each advertiser to select the audience that best meets your demographic criteria.

By advertising on a AudioNet programming page, you reach a qualified customer base, with the ability to target your message to the customer or prospect you would like to reach.

A partnership with AudioNet can include everything you need to deliver a strong message, ready for placement in our site including:

Custom Audio Production

Audio Insertions into programming that matches your demographics

Addition of custom audio progamming to your or our Web Pages

Audio that internationalizes your web site or message

Consultation on the preparation of your ad on the AudioNet site

Rotation of your ad banner across AudioNet pages

An Ad Showcase featuring your company, hotlinked directly to your ad

Your advertising can be hotlinked directly to your own Web site

High profile placement of your banner

User Feedback about your online presence

AudioNet can tailor a targeted advertising program to your needs. Results are just a phone call or Email away !

AudioNet Sponsorships

Master Page Sponsorship Program
The AudioNet Sponsorship program offers several types of advertising opportunities. The first, which is available now, is The Master Page sponsorships.

The Master Page sponsorship program focuses on the Master Topic Pages that AudioNet offers. These Pages are direct links from the home page and incude the following Programming Groups:

Sports

Talk Shows

Specialty Programs

Hot Programming

New Programs Today

Live Programming

Live Football

Live Basketball

Politics

Interviews

Music

With more being developed

With the Master Page Sponsorship, the advertiser purchases sponsorship of the programming group they desire on a quarterly or annual basis.

The sponsorship includes a banner graphic that will be placed at or near the top of the page of the Program Group selected. The graphic is to be of the dimensions specified by the Master Sponsorhip program, and can be changed as often as weekly. In addition the graphic will be linked to the home page, or selected site of the advertiser.

Master Sponsors will also have the opportunity to offer promotional opportunities on their Master Page.

The Master Sponsorship Program, will deliver on an average, 200,000 page views monthly.

Pricing starts at $75 per thousand page views.

Additional Opportunities

Audio Promotion

WWW.AudioNet.Com is the only site on the Internet that offers audio promotions on Web Pages. No where else can you offer audio information about your products or services. The opportunities are astounding.

– Web sites can be internationalized with foreign language audio descriptions of a site

– Programming can be changed and updated on a daily basis.

There is no better way to differentiate your company on the Net !

Pricing is program specific.

AudioTags

AudioNet can add 20 second or less audio tags to existing programming. For instance, before users begin listening to a sporting event, a tag can be added that says “ This Duke -vs- North Carolina basketball game has been brought to you by….”, or “Don’t forget to check for …..” etc. Many AudioNet programs have thousands of listeners per day. So this is a unique way to make sure that your message is heard. Again, and again, and again..

Pricing starts at $500 or 50 cents per month

Commercials AudioNet has the right to replace local commercials in most syndicated programming. This allows us to offer a wide assortment of commercial time slots for programming by type and time. Slots are available in :15, :30 and :60 minute lengths, with a minimum committment of 100 units.

In addition, all commercials remain in the archive versions of progamming so that listeners will hear them as long as the program is archived.

Pricing starts at $50 per spot.

Available Discounts

10% discount for 3-month commitment

10% discount for commitment to two sponsorships in the same month

15% commission to recognized agencies

Order Form and Contract
To order your Sonsorship, print and complete the following and mail it to AudioNet, 2929 Elm St, Dallas, Tx. 75225. Our phone numbers are 214-696-3320 or 1-800-34Audio
You can also e-mail the information to mcuban@audionet.com

Company Name:__________________________________________________________

Start ad on 1st day of ______________________________________, 199____

Stop ad on last day of ______________________________________, 199____

The above-named advertiser requests Publisher, AudioNet Inc,
and Publisher agrees to advertise the advertiser’s material in the
AudioNet Programming Guide, a Broadcast Network on the Internet. The
Advertisement shall run for the duration set forth above at the rates
in effect at the time of the contract. All advertising shall conform
to the Publisher’s publication requirements as well as the guidelines
of legality and good taste. The terms set forth in the Publisher’s
Technical Specifications and Terms and Conditions are incorporated
herein by reference. This agreement sets out the entire understanding
of the parties except as otherwise agreed upon in writing.

AudioNet provides the following technical specifications for Sponsors who will provide their own banners. Or, simply give us the information you want to include and let us design a successful banner for you.

Delivery of GIFs
All Sponsorship materials must adhere to the above specifications and be delivered no later than three weeks before the Sponsorship start date.
E-mail:mcuban@audionet.com. We accept BinHex, zip compressed format files. All formats must be mailed in ASCII encoding (uuencode, mmencode).

FTP: Contact your AudioNet Rep

Disk media: 3.5- DOS format floppy disk, CD-ROM

Audio Tag Formats:
Audio tags are limited to 20 seconds, and must be submitted in either cassette format, or real audio compressed ra format.

Delivery of Audio
All Sponsorship materials must adhere to the above specifications and be delivered no later than three weeks before the Sponsorship start date.

Terms and Conditions

Terms of Payment

We will hold reservations only when we have both a signed contract and a purchase order.
The start date can be no earlier than 3 weeks after we receive a signed contract and a purchase order.

We will invoice Sponsors by the first day of the contract period.

Payment is due net thirty days (30) from date of invoice receipt.

Restrictions

Audionet reserves the right to refuse any request for Sponsorship and the right to cancel Sponsorships that do not fulfill the obligations set in the Sponsorship contract. AudioNet does not accept Sponsorship requests for products or services related to firearms or pornography.

AudioNet PROVIDES SPONSORS WITH USAGE STATISTICS ONLY AS A COURTESY. AudioNet SHALL NOT BE HELD LIABLE FOR ANY CLAIMS RELATING TO SAID USAGE STATISTICS. AUDIONET MAKES NO GUARANTEE THAT USAGE STATISTICS WILL BE EQUAL TO ANY PUBLISHED NUMBERS AT ANY GIVEN TIME.

General Advertising Policy
All advertising is subject to the approval of AudioNet
(the Publisher).

All advertisements are accepted and published upon the representation
that the advertiser and/or the agency is authorized to publish the
entire contents and subject matter of such advertisement and that
submitting advertiser/agency will hold Publisher harmless from any
suits and costs arising from the publication of such advertisement,
including suits for libel, violation of privacy rights, plagiarism,
and copyright infringement.

In the event of nonpayment, Publisher reserves the right to hold the
advertiser and/or agency jointly and severally liable for such monies
as are owed to Publisher plus 18% interest on all amounts over 60
days past due. Any advertiser with a past due account may not
advertise in current or future issues.

In the event of an advertising publication error arising exclusively
from the fault of the Publisher, then the Publisher’s sole and
limited liability shall be the amount paid by the advertiser to
Publisher for such advertisements. Publisher shall have no further
or other liability and shall not be liable for any indirect,
consequential damages (e.g. loss of profits or business). All claims
thereof must be made in writing to Publisher within 10 days after
publication.

Terms and Conditions

Publisher reserves the right to revise its advertising rates or
changes at any time upon 30 days notice. This might be required as
circulation increases. Only where specifically designated in the
contract, rates per thousand for advertisers/agencies with insertion
contracts shall not be modified during the remaining terms of the
contract. The modified rates shall take effect following the
termination of the contract term. Publisher shall have no obligation
to publish any advertisement not received at the Publisher’s offices
by the closing date.

All restrictions, positioning, separations, facing, editorial
adjacencies, or other stipulations are at the decision of the
Publisher unless otherwise provided in writing.

Cancellation or nonperformance of any part of a contract shall
nullify all applicable rates and/or positions for the balance of the
contract. Rates charged and discounts are subject to short rate
adjustments if the space actually used and paid for differs from
that originally contracted. In the event of advertiser’s and/or
agency’s nonpayment or other policy default, Publisher reserves the
right to cancel, without notice, the contract or advertisement
publication. All changes or notices must be in writing to be valid.

Publisher is not liable for any delays in delivery and/or nondelivery,
acts of God, action by any governmental or quasi-governmental agency,
fire, flood, or other acts beyond the control of Publisher.

All disputes shall be submitted to arbitration in the state of Texas.
Terms of any separate agreement are incorporated by reference only if
so designated in such other document.

Sample Email to Web Master for Links: Internet Service Provider

Dear Webmaster,

AudioNet is the first Sports and Talk Radio Network on the Net. We provide a complete selection of live and archived programming from stations such as KLIF Dallas, KOA Denver, WOR New York, KFI LA, WQAM Miami, KFAN Minneapolis, WTAM Texas, plus live college and pro sporting events such as Texas AM, SMU, USC, Baylor football and Redskins, Vikings, and Chargers football with more teams being added every day.

Listeners hear their favorite shows in Real Time, no waiting for files to be downloaded!

The reason for this Email, is that we have had several of your users surfing our site. We would appreciate if you would consider adding us to your Hot List of Sports or Entertainment Web Sites so that other users can become familiar with WWW.AudioNet.Com

Thank you for your consideration. If you have any questions, please let me know.

Mark Cuban
mcuban@audionet.com

Sample Email to Web Master for Links: Sports Site

Dear WebMaster.

AudioNet is the first Sports and Talk Radio Network on the Net. We provide a complete selection of live and archived programming from stations such as KLIF Dallas, KOA Denver, WOR New York, KFI LA, WQAM Miami, KFAN Minneapolis, WTAM Texas, plus live college and pro sporting events such as Texas AM, SMU, USC, Baylor football and Redskins, Vikings, and Chargers football with more teams being added every day.

Listeners hear their favorite shows in Real Time, no waiting for files to be downloaded!

The reason for this Email is to ask you to consider establishing links between our sites. Our site is growing by leaps and bounds, and we feel that by establishing links, we will be able to introduce each others’ site to a whole new group of users.

Thank you for your consideration. If you have any questions, please let me know.

Yes, broadband speed and quality have gotten better. But it’s still behind the most of the developed world. We pay a lot more on average for slower speeds on average.

The overarching problem is that there is no competition among ISPs. They each have monopolies where they operate. That in turn gives them little incentive to provide better service, invest in infrastructure, and so on. In fact investment in those things have declined over the last four years.

Allowing ISPs to compete would be wonderful, but they’re not competing now. And the way the system is set up now, they won’t need to.

The unfortunate truth is that while Title II isn’t ideal, it’s the best and only option we have right now to ensure those monopolies continue to run away.

Anyway, let me know what you think.

Mark Cuban<mcuban@gmail.com>

Nov 13 (3 days ago)

to Steve

If you don’t like it now let the government get involved.

Walk into any best buy and choose from 3 wireless broadband options and cable and Telco wired option

You have choices

How much faster are all those connections today then last year and the year before

That article you tweeted was beyond stupid

Steve Kovach

Nov 13 (3 days ago)

to Mark

Wireless is not an option. It will be one day, but right now it is far too expensive and spotty coverage-wise to be a replacement for wired broadband. Try connecting to aLTE network outside a major city and you’ll see what I mean. Maybe someone will swoop in and invest bazillions to build out a better wireless network. I hope that happens.

But for now, it’s all about wired, which is monopolized. And it’s going to be like that for the near to medium term. What’s your solution?

Mark Cuban<mcuban@gmail.com>

Nov 13 (3 days ago)

to Steve

where do you live ?

and i just realized you are with BI.

these arent for publication

m

Steve Kovach

Nov 13 (3 days ago)

to Mark

New York City. Manhattan, specifically.

I’d like to publish something in addition to your tweets though. A lot of people are talking about it. What’s your answer to solving the wired broadband monopoly if not Title II or something similar?

Mark Cuban<mcuban@gmail.com>

Nov 13 (3 days ago)

to Steve

First of all, I think that ISPs, however you define them are doing an amazing job increasing bandwidth available to homes. The idea that netflix , hulu and the aggregate of all OTT services can grow to where they are, as quickly as they have and service has gotten better, not worse in most places and cases, is a testament to the actual investment being made on increasing bandwidth. PRoviders are jacking up not just b/w to the home, but the through put as well.

something is driving them , if not competition, what ?

and Isnt theretmobile,verizon, att, sprint inmanhattan for wireless ?

Dont all have coverage for most of the continental US ?

if you can make your phone a hot spot on all carriers (some charge more ), then you have broadband options,

when you want unlimited or close to unlimited bandwidth, then you have fewer choices or you may not like your choices, or coverage , but you have options, even if imperfect

then of course you have the option of walking out the door to any number of public hotspots to use wifi and the number and coverage of wifi hotspots is expanding every day

You may not like all your options, but thats a different issue. but lets put all that aside

the big morass is with the nuance of defining what will be covered and how. No one can agree what net neutrality is and what title 2 should cover. What i am certain of however is that the government wont do a good job avoiding the law of unintended consequences

And let me be clear, if the promise of the internet was content like movies and tv shows or music videos, then none of this would be a big deal to me.

But its not.

We dont know whats next on the net and how it will be impacted by the need for the government to define what can and will happen on the net in some manner that they think protects consumers.

What if the need for machine vision is ubiquitous for some application, say self driving cars ,what happens ?

What if communities want to put up high res, high bit rate, real time video around schools , intersections, where ever the residents agree they are willing to accept any privacy issues. What happens ?

What if some amazing application appears that wants to suck up every free bit of bandwidth available in a shared manner between every and any CPU made available to it ?

What about medicine and health care. THere is an emergency surgery that a doctor who is who knows where wants to be able to help in some manner that is unknown to us today, but all she cant get the bandwidth allocated to the application because it happens to be when tv and movie OTT services swamp bandwidth between the doctor and the remote hospital

what about the internet of things, what high bit rate applications will be created and how can they, or any other high bit rate applications get past the 50mbs peer to peer unicast streams that kids are streaming to each other on for 5 hours a night ?

we are trying to define the undefinable because it seems like some people are afraid they may be denied movies and tv shows.and the like

that makes no sense to me

Steve Kovach

Nov 14 (2 days ago)

to Mark

First, thank you for responding. This is great and really clarifies your tweets from yesterday and I think everyone will get a lot out of it.

A few things:

Yes, there’s great competition among the wireless carriers right now. The four major ones are available just about everywhere. And the competitive landscape is mostly working there and benefitting customers. Look at T-Mobile. The changes Legere has made there over the last 2 years have caused the big guys like Verizon and AT&T to react and change pricing plans and what they offer. That’s good!

But wireless broadband is not designed to be a replacement for your wired broadband. It’s designed to let you sip data on the go. Depending on the carrier, data plans can cost ~$60 for 3 GB of data per month. If you go over that, the carrier either throttles your speed or charges you extra for more data. That’s way more expensive than getting 250 GB or unlimited data on wired broadband for about the same price.

It’s unfair to say wireless and wired broadband providers compete with each other. They don’t. They will some day, maybe, but not now.

I also disagree that broadband has gotten as good as you think it has. Yes, it’s incrementally better, but still far behind other developed countries. Investment in broadband networks is declining, not going up. And the ISPs have no reason to build out their networks because there aren’t any viable competitors. (Google Fiber is an exception, but it’s only available in a handful of cities.) I also don’t consider free hotspots at coffee shops, etc. a competitor because they use the same ISPs folks use in their homes. Plus, I doubt ISPs are very worried about people sitting in Starbucks all day using free WiFi.

Your example of bandwidth for medicine and healthcare. Obama’s proposal would prioritize traffic for essential services like that. So that’s not an issue.

I do agree with you that we don’t know what the Internet will become, and what kinds of services it will power down the road. But I think it’s a narrow view saying net neutrality advocates just want faster Netflix. They don’t. Netflix is often used an example, but those who support Title II see the internet the same way you do. Who knows where we’ll be in a few years! And I think that gives us even more reason to make sure it’s protected now.

Based on what you’ve written, I think our goals are the same, but we differ on how to get there. I find that comforting!

Let me know if there’s anything else you’d like to add.

Mark Cuban<mcuban@gmail.com>

Nov 14 (2 days ago)

to Steve,

On Nov 14, 2014 9:19 AM, “Steve Kovach” <skovach@businessinsider.com> wrote:
>
> First, thank you for responding. This is great and really clarifies your tweets from yesterday and I think everyone will get a lot out of it.
>
> A few things:
>
> Yes, there’s great competition among the wireless carriers right now. The four major ones are available just about everywhere. And the competitive landscape is mostly working there and benefitting customers. Look at T-Mobile. The changes Legere has made there over the last 2 years have caused the big guys like Verizon and AT&T to react and change pricing plans and what they offer. That’s good!
>
> But wireless broadband is not designed to be a replacement for your wired broadband. It’s designed to let you sip data on the go. Depending on the carrier, data plans can cost ~$60 for 3 GB of data per month. If you go over that, the carrier either throttles your speed or charges you extra for more data. That’s way more expensive than getting 250 GB or unlimited data on wired broadband for about the same price.

..

What on the Internet ends up being used in the way it was designed ? The Internet was designed for everything but video. There are networks designed to carry video signals and they deliver digital TV channels every second of the day

You may not like the depth of competition wireless currently provides , but then wireless networks are getting better by the day and standards are being set for 5g that will compete with wired broadband

There will come a time in the next decade when cutting the cord refers to cutting your broadband cord. It’s inevitable. How will Title 2 deal with that ? Will Title 2 sunset in 5 or 7 or 10 years or will we find the future of broadband cut off at the knees because title 2 of 2015 didn’t anticipate broadband of 2022?

Unwired WiFi networks are being created There are thousands of broadband Hotspots. How is that happening ? How far will it go and how will Title 2 impact their growth

>
> It’s unfair to say wireless and wired broadband providers compete with each other. They don’t. They will some day, maybe, but not now.

It’s unfair because it doesn’t fit your argument
>
> I also disagree that broadband has gotten as good as you think it has. Yes, it’s incrementally better, but still far behind other developed countries. Investment in broadband networks is declining, not going up. And the ISPs have no reason to build out their networks because there aren’t any viable competitors. (Google Fiber is an exception, but it’s only available in a handful of cities.) I also don’t consider free hotspots at coffee shops, etc. a competitor because they use the same ISPs folks use in their homes. Plus, I doubt ISPs are very worried about people sitting in Starbucks all day using free WiFi.
>

Nonsense. How much wired bandwidth do you have today to your home vs 3 years ago what’s the comparative throughput?

And add some context

Netflix started streaming in earnest 5 years ago and the usage exploded. It went from DVD to consuming 30pct of prime time bandwidth. Networks built out to cover it and as a result Netflix is able to support 10s of millions of subscribers

If the networks aren’t keeping up why are the number of over the top video provider start ups exploding right now ? Are they all stupid ?

The amount if video consumed on the net is growing how fast ? Right ? How has that happened if networks are so bad ?

How is it that 4k video is now being streamed. 4k. Seriously if there was a fear of unequal access how in the world would 4k over the even be possible ? That’s 4x the bandwidth of HD

What about cloud computing ? How did it explode from nothing to huge ?

Millions of companies trusting the net to provide access to any digital type of content and amazon Microsoft Google IBM and others trusting the net to provide access to their clouds and hosting servers on the networks you want to regulate

What is the impact of net neutrality going to be on clouds ?

What about cyber security , the minute there is an attack that does damage, you can bet that title 2 will be used as a weapon by politicians and we will have discussion of title 3 start.

What about CDNs? With NN in place CDNs will explode. They will pay the networks a ton of money to host their servers and then charge the same people that you think will buy high end commercial fast lanes a ton of money to assure their streams are better to the last mile than Smaller competitors are. Should we regulate CDNs?

And of course what about the many other reasons beyond lack of choice in the last mile that impact consumer experience ?

When your next door neighbor streams his live gaming all day to his friends at 50mbs and everyone else on that last mile buffers all that the time who takes responsibility?

Should title 2 throttle upstream bandwidth to make sure the last mile isn’t impacted by bandwidth hogs ?

What happens if after title 2, investment doesn’t keep up for the last mile and people start complaining that their service suffers because their neighbors stream all the time and the question is why should they suffer so their neighbors can watch streaming video rather than tv ? Why should a non OTT subscriber pay more so streamers get their video ?

What about non essential but ground breaking bandwidth hogging applications

If you want to see bandwidth and innovation throttled, have the government regulate network management and investment

> Your example of bandwidth for medicine and healthcare. Obama’s proposal would prioritize traffic for essential services like that. So that’s not an issue.

NOT True. First in line in a traffic jam is still slow and buffering.

And how are you going to regulate quality of service settings ?

Will Title 2 decide how last mile consumer usage will be prioritized vs downstream ?

Who is going to say what an essential service is ?

>
> I do agree with you that we don’t know what the Internet will become, and what kinds of services it will power down the road. But I think it’s a narrow view saying net neutrality advocates just want faster Netflix. They don’t. Netflix is often used an example, but those who support Title II see the internet the same way you do. Who knows where we’ll be in a few years! And I think that gives us even more reason to make sure it’s protected now.

You can’t protect what you don’t know. If that is the right approach why not further regulate everything ?

>

What happens when some new Internet service takes on a political tint or is perceived as impacting an election

What if they get the legislation wrong ?

No one trusts the politicians we have in place to do anything right, but we think they can take on a difficult issue like this?

, Based on what you’ve written, I think our goals are the same, but we differ on how to get there. I find that comforting!

No they aren’t.

There is a place for more
government If the net wasn’t working. it’s working

The issues above are just the ones I can think of off the top of my head
I’m sure there are thousands more

The net is working. There is no better platform for innovation in the world right now than the net and you think further regulating it is good ?

You keep on saying that more money is being spent elsewhere on networks than here in the USA. Show me those numbers I see more per capita being spent here

And you talk about our ranking in the developed world. You and many are being intentionally obtuse

All the surveys are based on average speed. We rank 11th I think , but the difference between 11 and 2nd is 3 mbs

3mbs and that’s based on averages

When you look at peak speed it’s a smaller delta

And all the countries above us are denser and less populous

As far as growth in speed , we are increasing 9pct or more quarter over quarter

How is that bad ?

Steve Kovach

Nov 14 (2 days ago)

to Mark

I’m still not convinced by your argument that wired and wireless broadband compete. IfLTE from wireless carriers won’t work everywhere (indoors, basements, dead zones, rural areas, etc.) and it costs much more than wired broadband, how are those direct competitors? How are wireless carriers offering a viable alternative to wired broadband? (That’s not to say they’ll never be able to do it. But in the near to medium term, it’s not gonna happen.)

I also don’t buy the population density argument when it comes to internet speeds.

I live in Manhattan, which is very dense (duh.)

Here’s a speed test from my apartment on Time Warner cable in April:

Here’s a speed test I took from a random coffee shop using free WiFi in Seoul, Korea in April:

That’s a huge gap. And while I can pay Time Warner extra to get speeds like that, I wouldn’t have to in Korea.

Mark Cuban<mcuban@gmail.com>

Nov 14 (2 days ago)

to Steve

you got me. Wearent as good as southkorea.

now explain to me how government intervention is going to change that ?

And explain to your internet cafe how they are only getting 50mbs when they are paying for more

Mark Cuban<mcuban@gmail.com>

Nov 14 (2 days ago)

to Steve

oh and forgot to answer your wireless issue

Your wired broadband doesnt have drops that cover every inch ofyour apartment. ANd your wi fi wont either, and you risk interference from your neighbors appliances. It has limits. Like mobile.

Have you checked to see if you can get mobile service in your apartment ? Maybe with an amplifier ?

you arent a typical internet user.

What percentage of internet homes use under 40gbs per month ?

Steve Kovach

Nov 14 (2 days ago)

to Mark

That still doesn’t account for the cost thing. Watch two movies on Netflix and you’ve eaten up your data cap from Verizon.

Mark Cuban<mcuban@gmail.com>

Nov 14 (2 days ago)

to Steve

Mosthousehouldsarentnetflix users. At least not yet. Most just use the internet like they did prenetflix

Steve Kovach

Nov 14 (2 days ago)

to Mark

That was just an example. What about YouTube? You don’t think the average person can eat up 3 Gb of YouTube along with other basic stuff like emailing, web browsing,facebooking, and so on? 3 Gb is nothing.

My point is, wireless plans are designed for on the go. Wired is designed for heavy usage. They’re not the same. I hope that changes, but it’s not the reality of things now.

Also!

Next time you’re in New York you should come by BI’s office and hang out. We’ve grown so much. You should see it. Crazy, exciting company to be at. I’ve been here four years and I love it.

Mark Cuban<mcuban@gmail.com>

Nov 14 (2 days ago)

to Steve

Would love to come by

And remember we aren’t typical users

Mark Cuban<mcuban@gmail.com>

2:10 PM (0 minutes ago)

to Steve

You took a nice discussion and cherry picked it into bullshit so you could make your point.

]]>http://blogmaverick.com/2014/11/16/my-conversation-with-business-insider-about-net-neutrality/feed/36markcubanInline image 1Inline image 2http://blogmaverick.com/2014/11/16/my-conversation-with-business-insider-about-net-neutrality/Another interview about streaming media from 1999http://feedproxy.google.com/~r/mavsblogmaverick/~3/5ecwjhTnjx8/
http://blogmaverick.com/2014/08/24/another-interview-about-streaming-media-from-1999/#commentsMon, 25 Aug 2014 02:35:03 +0000http://blogmaverick.com/?p=2248]]>As I clean up or find old emails for whatever reason, its always interesting to run across old interviews I did about the future of streaming media. This interview was with Kevin Werbach who along with Esther Dyson wrote one of the leading newsletters of the time.

Here is the entire email, the good and the bad

At 02:48 PM 8/9/99 -0400, Kevin Werbach wrote:Thanks for your message. I’ll definitely be in touch when I put the piece together (probably either September or October), as your perspective would be very helpful.

The primary question I’m asking is how streaming video will develop as a mass medium. I’m certain it won’t look like today’s broadcast and cable offerings, with all the channel and time constraints… but I’m equally sure it won’t simply be random access to an infinite number of on-demand streams. What (not just who) takes the place of broadcast networks as a video *service* that brings together audiences and efficiently trades eyeballs for dollars?

My Answer>it will be a progression. First it will just be a random collection of on demand. Its the fun of walking in to the NY Public Library. So much stuff you are awed and you just walk through the stacks till you find what you want.

But quickly of course people will tire of this, and so we will have to package . The packaging will be in “stations” and user generated playlist stations. These will evolve as people pick their “programmers” that they trust.

Remember, the only revenue source is not eyeballs. I personally dont think you will be able to aggregate enough eyeballs to be a mass media in the tradtional sense of a single channel. All you have to do is look at what cable has done to network tv. The more choices you have, the more you get to choose exactly what you want to the exclusion of traditional programming. So the numbers fof the networks have fallen off a cliff, but the cable networks havent garnered “mass media ” numbers individually

So there will have to be newer models. To pay for content creation and for the distribution itself.

In a world of digital delivery, there is no reason to distinguish between audio/video/data as the widget that is being sold, so they will be sold together. It could range from watch this movie for $1 and when you are done, the entire soundtrack will have been streamed to you and saved to your hard drive.

Or it could be the Barry Manilow channel where its all barry all the time, and included in the $2 per month, or 25 cents per month for that matter is all the barry you can watch AND all the music you can download. This could be a windfall for Barry and his label, given that most artists and labels together make less than $3 per cd combined. And for 1 CD per year, that amounts to 25 cents per month as break even, plus all the other things you can up sell them to

Or it could be if you are an exclusive customer of American Airlines, they will provide you with this programming for free, and the guide is downloaded as part of the stream. In otherwords, sponsored programming to enable the delivery of digital data or user patronage will be the way. Probably not much different then the origination of the soap opera.

Or you are a huge sports fan, and you are willing to pay 1 buck a month to watch on demand every Emmet Smith Run, or go back in the archives to watch Michael Jordan play in his last season at UNC.

But then who really knows. The key for us is to have the infrastructure and audience to enable learning and growing. If you dont have these, it doesnt matter what you do, and that is why I think the DENs of the world are doomed. Its way too expensive to acquire an audience

The following, as you can see below, is in response to my request that he look at Index.broadcast.com where we indexed closed captioning and meta data from audio and video content we had>And I’ll definitely check out the index site. I met with the >Islip/MediaSite folks a week or two ago, and what they’re doing sounded >very cool. (I’m embarrassed to admit, though, that our whole office runs >on a 384k fractional T1, despite my best efforts to get DSL installed, so >I’ll have to wait to try out the 700k streams.)

>>-k->>At 02.23 pm 8/7/99 -0500, you wrote:>>hey kevin>>saw you are going to be doing a feature on broadband video.>>>>dont forget to check out broadcast.com/broadband. We have several thousand>>hours of on demand video, and we also offer a growing list of live TV and>>Network feeds and even movie trailers and 700k>>>>and also check out our beta for indexing at>>index.broadcast.com>>>>just register and pick topics to search on. it only supports up to 150k>>now, but will be increased to 300k and then 700k.>>>>if you want to see some fun, but not public tests, of 700k, go to>>www.broadcast.com/mgm and check out the 700k feed>>>>

]]>http://blogmaverick.com/2014/08/24/another-interview-about-streaming-media-from-1999/feed/12markcubanhttp://blogmaverick.com/2014/08/24/another-interview-about-streaming-media-from-1999/The 6 Things You Need to Know to be Great in Businesshttp://feedproxy.google.com/~r/mavsblogmaverick/~3/ZISkKsENGGg/
http://blogmaverick.com/2014/08/17/the-6-things-you-need-to-know-to-be-great-in-business/#commentsSun, 17 Aug 2014 06:22:20 +0000http://blogmaverick.com/?p=2239]]>There are no shortcuts in business. In order to be successful there are some things that you must know. These are not all of them by a long shot, but IMHO they are 6 of the most important

1. Know how to sell.

Selling means being able to convey why your product or service, which may be you if you are looking for a job, will make things better. Selling is never about convincing. It is always about helping.

2. Put yourself in the shoes of your customer

If you know how to put the person you are dealing with in a position to succeed, you can be successful. In order to do this, you must be able to quickly understand the needs and demands of that person and those of the company(s) they work for or with. Every person and industry is different. This is something that comes from investing incredible amounts of time to understand different industries , businesses, roles, and what has made them work and not work.

It is a never ending process of learning about what companies need. What people in those companies need and how they work. If you don’t understand what it takes to make the people and companies you work with better, you don’t understand how to be successful

3. Know as much as you can about technology

The beautiful thing about technology is that it changes every day. Look at any tech you can see today or have ever seen. Any tech you have read about. It was invented by someone(s). They know the product better than everyone. On the day that it is released, you are as knowledgeable about that technology as anyone else in the world. From there its just about effort to keep learning.

If you are one of the few people that know the new technologies, you are in a unique position to put yourself in the shoes of your customer(s) and determine if the new technology can be of benefit. New technologies enable change and where there is change there is opportunity. Its up to you to figure out what that opportunity is.

4. Always ask how you would design a solution if no current solution existed.

99.99pct of the things we do in business are being done the way they have always been done. No one has re imagined how things should be done. That is what successful people do. Every situation they are in they take their knowledge of the business or situation they are visiting, whether its buying a deck of playing cards, eating at a restaurant or trying to solve a problem and think about how to re invent it. They dont ask people what they would want. They envision a complete reapplication . Then they decide what to do with what they just recreated.

5. Is it the path of least resistance to something better.

Lots of people come up with ways of doing things that they think are great/amazing. What they fail to ask is whether it will make anyone else’s life better or easier. The simple test of any imagineering of a process or situation is simple. Is this the path of resistance to a better place for the user ? Yes or No.

6. Be nice.

People hate dealing with people who are jerks. It’s always easier to be nice than to be a jerk . Don’t be a jerk

If you want to have an AskMeAnything on Cyber Dust, hit me up there and we can tell you how

]]>http://blogmaverick.com/2014/08/17/the-6-things-you-need-to-know-to-be-great-in-business/feed/73markcubanhttp://blogmaverick.com/2014/08/17/the-6-things-you-need-to-know-to-be-great-in-business/AEREO – Everything Old is New Againhttp://feedproxy.google.com/~r/mavsblogmaverick/~3/AvZFWvDzRUM/
http://blogmaverick.com/2014/07/19/aero-everything-old-is-new-again/#commentsSat, 19 Jul 2014 23:30:04 +0000http://blogmaverick.com/?p=2230]]>AEREO deserves a lot of credit for their effort. It was a long and expensive shot to do what they went for. But they went for it. And they attempted to pivot after their SCOTUS loss. I was watching with interest, because it is something we had examined 15 years ago at Broadcast.com

The technology has obviously gotten better on all sides of the equation, but sometimes a good idea is a good idea. Even if it is hard to make work. This is from January of 2000. What is fascinating is the alliances and attempts that were being made or considered. We also did the same kind of work to determine if we could set up antennas and a server for individual users and see if that was legal

Below it you will find a doc from 1999 where we tried to do the same thing in a different way a few months earlier.

It’s not Supreme Court worthy, but it was interesting. Everything old is always new again in tech

McDermott, Will & Emery

Washington, D.C.

memorandum

January 4, 2000

This memorandum analyzes whether, under recently-adopted amendments to the Copyright Act, Yahoo! broadcast could form a business alliance with a satellite carrier in order to deliver broadcast television signals under the satellite carrier’s statutory license.

Based on changes enacted to the Satellite Home Viewer Act (“SHVA”) this year, we believe that Yahoo! broadcast would have a strong argument that it is entitled to enter into a contract as a “distributor” of satellite transmissions of local broadcast signals under Section 122, and thereby benefit from that carrier’s statutory license to carry local broadcast signals. However:

This interpretation would rely on attaching a new meaning to the functional understanding of “distributor” under prior provisions from which the present language was, with significant changes, derived;

It will be necessary to negotiate such an agreement with a satellite carrier rather than demand one as a matter of right;

Reliance on this path could be read by some as weakening the case for Service Providers claiming, under present law, a direct statutory license under Section 111, or for achieving a change in the law to that end;

This interpretation would cover redistribution of local signals, but would not extend to signals of “superstations,” as to which more direct negotiations would still be necessary; and

Great care would have to be taken to comply with limitations as to which subscribers are entitled to receive such “local” signals, and apportioning potential liability for errors may be a difficult issue to negotiate with a satellite carrier.

Insofar as we are aware, the possible avenue outlined below is novel and has not been publicly discussed, so might be considered “aggressive.” It would not, however (provided that the satellite carrier is comfortable with our interpretation), require any prior FCC authorization. It would also be necessary to think through the reactions of other market participants, including those who may not welcome competition arising by an unexpected means.

Distributors and Copyright Law

Federal copyright law, as now amended, has two statutory provisions that govern television broadcast signal delivery by satellite carriers: Sections 119 and 122. Section 119, which was enacted in 1988 to keep pace with consumer usage of large “C-Band” satellite dishes, allows satellite carriers to retransmit distant broadcast signals to subscribers that cannot receive local broadcast signals using antennas. In those days, the “satellite” operator was, essentially, a wholesale distributor of signals to cable system operator earth stations, using the “C-Band.” Copyright issues arose when C-Band earth station equipment became cheap enough that individual consumers were able to buy them and, without authorization, receive signals that were meant for distribution by or to cable operators.

Signal distributors (e.g., HBO) were paid by cable distributors and did not want to furnish the same service free to unauthorized consumers. Hence, they began scrambling their “feed.” Consumer complaints (and concerns about the imminent or successful “hack” of Digicypher encryption) compelled Congress in 1988 to step in and provide for an authorized “retail” window for satellite signal reception through the original version of SHVA. With respect to superstation and network broadcast signals, a statutory copyright license was established in Section 119 for the satellite carrier to provide such signals directly to retail “subscribers,” or through a “distributor.” The concept of a “distributor” at this time, however, was not meant to imply further carriage of the signal after it reached a dish and receiver (“earth station”). Rather, a “distributor” was someone – typically an earth station retailer or a local cable operator – who would perform the task of “marketing” and “packaging” the service to a subscriber, including arranging for the authorizations for the right and ability to descramble the signal. (Cable operators entered this business because, at the time, the reach of their own wired cable systems was still limited, and the “satellite” operator was also in the cable business rather than, as today, a direct competitor. So the cable operator/”distributor” would provide the “subscriber” with an earth station and signal package, much as a DirecTV retailer does today.)

The limitation of a “distributor” to a marketing/packaging function was enforced through a series of nested definitions. Section 119 defines a “distributor” as:

[A]n entity which contracts to distribute secondary transmissions from a satellite carrier and, either as a single channel or in a package with other programming, provides the secondary transmission either directly to individual subscribers for private home viewing or indirectly through other program distribution entities.

“Private home viewing” means “the viewing, for private use in ahousehold by means of satellite reception equipment which is operated by an individual in that household and which serves only such household, of a secondary transmission delivered by the satellite carrier….” Similarly, the definition of “subscriber” contained the “private home viewing” (through satellite reception equipment) limitation. Thus, it made no sense to consider as a “distributor” anyone who carried the signal from a satellite earth station to the subscriber, because the subscriber himself must use a satellite earth station in the household to receive the signal. Subsequent FCC proceedings explicitly confirmed this interpretation.

This year’s SHVA bill did not repeal Section 119. It did, however, add a Section 122, governing the statutory license for “local into local” transmissions of broadcast signals. While it carried forward and borrowed the definition of “distributor,” it omitted the words “for private home viewing” from the definitions of “distributor” and “subscriber” and eliminated the defined term – and, along with it, the “household” and “by means of satellite reception equipment” limitation. Arguably (but not explicitly), these omissions were made out of recognition that, in a world in which the satellite operators are already retail operations, a “distributor” may include someone who further extends the reach of the service by further carriage of the signal, rather than an entity that simply markets and packages the means of reception, as retail “distributors” now do. But it may also be argued that the changes were made simply to allow operators such as DirecTV, and its present retail “distributors” (e.g., Circuit City), to serve the business market and well as “households.”

The legislative history of the SHVA debate suggests that, in fact, the deletion of the “private home viewing” limitation was sought by EchoStar (and possibly DirecTV) to do away with both the “private household” and the redistribution limitations in prior law. The testimony of Charles Ergen before the House Commerce Committee in 1998 directly addresses this point:

H.R. 3210 … authorizes satellite delivery of broadcast signals for private home viewing only. Satellite providers should already have the right, just as cable does, to offer their service to Multiple Dwelling Units and commercial establishments offering some true choice to the millions of MDU subscribers. As the law stands today, EchoStar could not be here in this hearing room demonstrating its product because we’re restricted to home viewing.

The reference to Multiple Dwelling Units clearly implies that the signal would be redistributed by further technical means rather than merely packaged and authorized for sale.

In Section 122, the definition of “distributor” reads:

The term ‘distributor’ means an entity which contracts to distribute secondary transmissions from a satellite carrier and, either as a single channel or in a package with other programming, provides the secondary transmission either directly to individual subscribers or indirectly through other program distribution entities.

Thus, according to the argument made above, the absence of the term and associated definition of “private home viewing” and the phrase “satellite reception equipment” in Section 122 expands, to include physical redistribution of the signal, the scope of business arrangements that satellite carriers may pursue in order to gain distribution of local broadcast signals to subscribers. If such is the case, there is no apparent reason why delivery via the Internet is not such a means, provided that the “distributor” is able to comply with the local geographic and record-keeping requirements of this provision.

Elaboration of the Argument that Section 122 Allows Redistribution of Local Broadcast Signals

A strict reading of the express language of Section 122 leads to the conclusion that satellite carriers can deliver local broadcast signals to residential or business locations. This conclusion is supported by a simple comparison of Sections 119 and 122. The statute also supports an argument that service can be delivered via means other than traditional satellite reception equipment because Congress eliminated this language from Section 122 but left it in Section 119. Taking these two modifications together, it would appear as though Congress intended to give satellite carriers more flexibility in how they deliver local programming to their customers. This conclusion is supported by the legislative history.

In enacting Section 122, Congress said it wanted to create parity between services available from satellite versus cable system operators. Congress thus gave satellite carriers the same right as cable systems to deliver local broadcast signals to business and residential subscribers located in the station’s local market.

Unfortunately, in the report accompanying the new statute, Congress was silent on why it removed the reference to “satellite reception equipment.” One possible conclusion, and the one on which our proposal depends, is that by eliminating the requirement that subscribers use satellite reception equipment, Congress moved away from a model where the satellite carrier controlled the signal delivery network to a model where some of the physical delivery network is controlled by distributors. This is a departure from the distributor approach historically implemented under Section 119 and Yahoo! broadcast must be prepared to defend why this interpretation of Section 122 is correct.

Besides relying on the fact that Congress used different language in Section 119 and 122, an argument can be made that giving satellite carriers and distributors more flexibility makes sense when considered in light of Congress’ goal of allowing satellite carriers to serve the same subscribers historically served by entities operating under the cable statutory license. Satellite carriers have only been able to penetrate the market for residential subscribers that have access to the open space needed to place a satellite dish (e.g., single-family homes and multi-tenant buildings where the resident has access to balconies, gardens, etc.). However, many potential subscribers lack this kind of access, especially in multi-tenant buildings. In these circumstances, satellite service cannot be a viable alternative to cable service because subscribers lack the right or ability to place traditional receiving equipment in areas that they do not own or control.

This problem is even more pronounced in the business context because of the size and design of many multi-tenant office buildings. For example, it is unlikely that occupants of the World Trade Center or Sears Tower could place individual earth station antennas out every office window in order to have access to satellite-delivered programming. Instead, the occupants are more likely to be relegated to receiving services from entities covered by Section 111 (e.g., cable, multipoint distribution or satellite master antenna service providers).

It could be argued that Section 122 eliminates a critical barrier to satellite carrier penetration of the residential and business markets by removing an unnecessary technological limitation in the way subscribers receive the satellite carrier’s service. Congress gave satellite carriers the flexibility to deliver their services to subscribers using a variety of technological solutions. Service delivery via the Internet provides an ideal solution in any multi-tenant circumstance because the service can be carried over existing telephone wires without the need for a satellite dish.

While the above approach appears consistent with the express language and legislative history of Section 122, Yahoo! broadcast would still likely face regulatory obstacles and competitive opposition to this interpretation.

Because Section 122 is a new provision, both the Federal Communications Commission and U.S. Copyright Office will likely exercise their respective jurisdiction over satellite delivery of broadcast signals and initiate rulemaking proceedings to implement the legislation. It is possible that comment could be sought on the role distributors can play in delivering local broadcast signals and whether any limitations should be placed on the type of equipment subscribers can use to receive such services. If these issues arise, Yahoo! broadcast would be given an opportunity to present its position. However, the FCC or Copyright Office could adopt a different viewpoint that would have to be challenged in court.

Distant Signals

The above analysis only applies to the distribution of local signals under Section 122. Although Section 119 provides satellite carriers with a statutory license to deliver distant network and superstation signals, it also includes the language noted above that limits delivery of such signals only to subscribers using satellite reception equipment for “private home viewing.” Consequently, if Yahoo! broadcast wants to deliver distant signals, it has two choices. It can deliver distant broadcast and superstation signals under negotiated agreements or it can strive to be considered an entity covered by the statutory license in Section 111 of the Copyright law.

Alliance Structure

Since the distributorship arrangement between a satellite carrier and Internet Service Provider is untested, we believe that both parties will have some flexibility over how the arrangement is crafted. The most likely satellite partners are EchoStar and DirecTV.

Because the arrangement must be negotiated, there are two inter-related benefits that Yahoo! broadcast could present to try to entice DirecTV or EchoStar into discussing a distributor relationship with Yahoo! broadcast. The satellite companies have publicly shared their interest in serving a broad subscriber base and would like to enter the market quickly. In order to do this, they must be able to gain physical access to potential subscribers. Access is not a problem when the subscriber owns the property where the satellite dish will be placed. However, where the subscriber leases space from a third party, the property owner has the ability to control whether the subscriber can receive satellite service by controlling access to the physical space needed to place the antenna. This means that the satellite carrier must negotiate with two parties: the subscriber and the building owner. Yahoo! broadcast can eliminate the third party because delivery via the Internet will not require the subscriber to use a dish.

Furthermore, Yahoo! broadcast offers a turn-key solution that can be implemented immediately in most environments. The satellite carrier or Yahoo! broadcast could market service to individual building occupants and then deliver service via existing infrastructure: the telephone lines and computers already in use by the new subscriber. The delay associated with landlord approval is eliminated and installation would be minimal when compared to the alternative of placing a satellite dish on the building and then running wires to televisions in individual offices.

If the satellite carriers are truly interested in improving their market penetration and competing with cable, Yahoo! broadcast’s ability to make service available quickly to subscribers in multi-tenant buildings presents an timely solution.

We have contacts with DirecTV and EchoStar, either directly or with some of their key business partners. If you are interested, we would be happy to try to determine if either company might be interested in exploring business opportunities with Yahoo! broadcast.

Once Yahoo! broadcast identifies an interested satellite partner, matters that would likely need to be addressed in a distributor agreement include:

Geographic Scope: Because the service arrangement between the satellite carrier and Yahoo! broadcast will be based on Section 122, the agreement would have to address measures both parties will take to ensure that service is not delivered to subscribers outside the local broadcast station’s market. This may include addressing a subscriber’s ability to store and forward broadcast signals outside the local market.

Subscription Service: Section 122 requires that the satellite carrier charge a fee for the service. The charge can be assessed directly on the subscriber or indirectly through the distributor. . Yahoo! broadcast and the satellite carrier would have to reach some agreement on the fee arrangement. One possible scenario would be for the satellite carrier to charge some portion of the typical monthly satellite fee for a subset of the programming; e.g., to offer the service for $x.95 per month to the in-office market, concentrating on free local programming plus government, business and technology channels (such as C-Span, Bloomberg and ZDTV).

Content Access: The agreement must address the specific content that the satellite carrier will deliver to Yahoo! broadcast and how such content will be delivered to subscribers. For example, will Yahoo! broadcast be given rights to deliver all content carried by the satellite carrier? Do existing retransmission consent or other content agreements limit the satellite carrier’s ability to allow a third party such as Yahoo! broadcast to deliver signals to subscribers? Can such agreements be renegotiated?

Exclusivity: Unlike Section 119, Section 122 does not include a provision that explicitly prevents a satellite carrier from discriminating between distributors. Consequently, it could be argued that Yahoo! broadcast and the satellite carrier can negotiate an agreement that gives the parties exclusive rights. However, such terms could heighten any opposition to the arrangement, especially by competitors. Yahoo! broadcast must consider whether it is better served by an agreement with exclusive terms or by an arrangement that others could also pursue. The latter approach might convert some of the potential opposition into supporters.

FCC Compliance: Satellite carriers operating under Section 122 will be subject to FCC rules that have not yet been adopted. For example, these carriers will be required to comply with certain mandatory carriage rules. They could also be subject to customer service requirements, advertising limitations and other public interest requirements historically imposed on cable systems. As the regulatory framework is developed, Yahoo! broadcast and the satellite carrier may have to adapt the business relationship to ensure that neither party is engaged in activities that would violate the new regulations.

Liability and Indemnification: Yahoo! broadcast will have to determine the extent to which it is willing to assume responsibility for actions that may lead to regulatory violations, copyright infringement, breach of contract or other legal problems for the satellite carrier. For example, how will Yahoo! broadcast and the satellite carrier allocate responsibility for determining whether a subscriber is in a local market?

This list is intended to flag subjects that should be addressed in any agreement between a satellite carrier and Yahoo! broadcast and are in addition to the traditional provisions included in any joint venture agreement. Once we have a better idea of the type of arrangement Yahoo! broadcast would like to pursue, we can more fully develop this list.

Other Internet Alliances

Finally, you asked us whether any satellite carrier has already entered into an agreement with an Internet Service Provider that is akin to the one under consideration by Yahoo! broadcast. At this point, we have not found any information that suggests that either EchoStar or DirecTV have entered into or are negotiating agreements to allow any Internet Service Provider to deliver local broadcast signals. Thus, Yahoo! broadcast appears to have some time to consider its options. Nonetheless, new partnerships are announced daily so it is possible that other companies are considering similar options and timely action is still important.

While we did not find information on anything on a distributor arrangement, we have included a short discussion on some of the other alliances that Internet companies have formed with satellite companies.

AOL/DirecTV: Earlier this year, AOL and DirecTV announced that they would be working together to introduce two new service arrangements. The first involves developing a new set-top box to allow DirecTV subscribers to access AOL Internet services via their televisions. This is akin to the service currently available through WebTV. The second project takes advantage of DirecTV’s satellite downlink capacity to allow AOL to deliver Internet content to subscribers at higher speeds.

Neither of these arrangements appears to involve television broadcast signal delivery to computers via the Internet from DirecTV to AOL subscribers. However, because we have been unable to secure copies of the agreement between AOL and DirecTV, we cannot say whether their relationship could be expanded under the existing agreement to include a service comparable to that being contemplated by Yahoo! broadcast. In addition, we do not know whether DirecTV’s relationship with AOL would prevent or militate against entering into a joint venture with Yahoo! broadcast.

WebTV/EchoStar: WebTV and EchoStar have developed the DishPlayer, which gives subscribers interactive TV viewing, e-mail and e-commerce capability. As is the case with the AOL/DirecTV project, the focus is on bringing internet-related services to the subscriber via the television. We did not locate any information that suggests that EchoStar will deliver broadcast programming via the Internet to computers.

The trade press reports that this joint venture is non-exclusive, with both companies retaining revenue generated from their core service offerings (i.e., EchoStar keeps the video revenues while WebTV retains internet revenues).

iBeam Broadcasting: Of all the companies we researched, iBeam appears to have adopted a distribution plan that is most similar to what Yahoo! broadcast is considering. iBeam is a streaming media company that delivers video and audio programming over the Internet using a combination of satellite and terrestrial communications connections. The primary distinction is that iBeam is not securing content from its satellite carrier. Instead, it uses satellites to moving third party content to information hubs that then serve as content access and distribution points for iBeam subscribers. However, the fact that iBeam has constructed a network based on satellite technology may make it easier for the company to adopt Yahoo! broadcast’s approach were iBeam to learn of it.

iBeam has content distribution rights granted through negotiated agreements with Bloomberg, snap.com, ZDTV, Entertainment Boulevard and others. The company recently announced a business relationship with Sony America. The trade press is speculating that this relationship will give iBeam access to Sony’s music and movie libraries, and possibly games.

Geocast Network Systems: Unlike Internet-based arrangements, Geocast uses excess capacity in digital television broadcast spectrum to deliver video and audio content via receivers connected to subscriber PCs. In addition to developing its own content, Geocast will deliver traditional and customized broadcast content, as well as interactive services. Subscribers continue to use their own Internet Service Provider for e-mail, web access and transactions over the Geocast service.

The trade press is reporting that Geocast has entered into agreements with Hearst-Argyle and A. H. Belo television that allows Geocast to carry their stations’ content as well as using their spectrum. The company is also in discussions with CBS.

If you are interested in additional information on any of these companies, we would be happy to provide you with copies of our research materials.

-o0o-

We will continue to explore additional options that may interest Yahoo! broadcast. In the meantime, if you have any questions about the content of this letter, please let us know.

****

This is from 1999

McDermott, Will & Emery

Washington, D.C.

memorandum

We wanted to provide you with our initial response to your questions about ways in which broadcast.com could secure authority to provide television broadcast programming over the Internet. While we have assessed some of these options on your behalf in the past, the law has continued to evolve in ways that may help broadcast.com.

We wrote to you previously about the possibility of broadcast.com becoming a cable system or open video system (“OVS”) operator to deliver television broadcast programming via the Internet. These options were attractive because of federal copyright and communications laws that give such entities certain rights to deliver television broadcast signals to subscribers. However, at the time, we also voiced uncertainty about how the rules might apply to Internet-based delivery methods and concern over the regulatory burdens associated with each option. While some of the same issues still exist, we wanted to revisit these possibilities with an eye towards finding a way of allowing broadcast.com to expand its service offerings.

In addition to updating our past assessment, we also want to discuss an option stemming from the Satellite Home Viewer Improvement Act of 1999 that was signed into law last week.

Broadcast.com’s Proposed Service Offering

For purposes of this letter, we are relying on several assumptions about broadcast.com’s capabilities and its proposed service offering:

Broadcast.com would deliver television broadcast programming on a subscription basis.

The service would not be available on a dial-up basis and would only be available at speeds of 300 Kbps or greater.

Subscribers would pay a fee for the service. The fee would be paid with a credit card that has a billing address that corresponds to the subscriber’s access location.

As a result of the first three assumptions, broadcast.com would have the ability to identify a subscriber’s physical location in a large majority of cases.

Broadcast.com would only provide service to subscribers in locations that correspond to any geographic limits imposed by the applicable copyright and FCC regulations.

Broadcast.com would implement procedures to disconnect service for any subscriber whose location cannot be verified as being within the geographic area required by the applicable rules.

Business Options

Based on our review of the FCC’s rules, there are currently three ways that broadcast.com can gain permission to deliver television broadcast signals via its own Internet service. First, broadcast.com can negotiate directly with television broadcast stations and networks for the right to deliver signals. Second, broadcast.com can become one of the entities allowed under federal copyright laws to transmit television broadcast signals pursuant to a statutory license. However, broadcast.com would still have to comply with retransmission consent or must-carry obligations under federal communications laws. Third, broadcast.com can form business alliances with third parties that would allow the company to deliver television broadcast signals under the authority of the third party. As the first option described above is well known to broadcast.com, this letter will focus on the issues associated with the second and third options.

Finally, when revising the Satellite Home Viewer Improvement Act of 1999 to remove language on the delivery of television programs over the Internet, several Senators said they intend to hold hearings on this subject early next year. These hearings could present an opportunity to seek new legislation that would give broadcast.com authority to deliver television broadcast signals via its Internet system. We will put together some alternative legislative options in a future memorandum.

Option 2: Seek Classification as a Covered Service Provider

Summary of Recommendation

Broadcast.com should assess whether it can become an OVS operator by:

Confirming that its system configuration conforms to the definition of an open video system.

Identifying target service communities based on broadcaster’s must-carry elections and state or local franchise laws.

Discussion

In order to deliver television broadcast services, broadcast.com must ensure that its service offerings are authorized under both federal copyright and communications laws. Federal copyright law gives cable, OVS and satellite entities a statutory license to deliver television broadcast signals to their subscribers. Broadcast.com could take advantage of this authority if its proposed service could be classified as either cable or OVS service.

System Classification

Broadcast.com must first determine if its system configuration fits the definition of a cable or open video system.

The FCC’s rules define a cable system as: “A facility consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide cable service which includes video programming and which is provided to multiple subscribers within a community, but such term does not include: (1) A facility that serves only to retransmit the television signals of one or more television broadcast stations; (2) A facility that serves subscribers without using any public right-of-way; (3) A facility of a common carrier … except that such facility shall be considered a cable system to the extent such facility is used in the transmission of video programming directly to subscribers, unless the extent of such use is solely to provide interactive on-demand services; (4) A qualified open video system; or (5) Any facilities of any electric utility used solely for operating its utility systems.” This definition is based on Congress’ express statutory language. Consequently, the FCC has less flexibility to classify as a cable system any system configurations that depart from this definition.

Due to the narrow language of the statute, the FCC has historically viewed cable systems as having physical transmission facilities. For example, exception (2) above says that service delivered via a facility that does not use public rights-of-way does not fall under the definition of a cable system. The agency reads the definition with its exceptions as implying that a cable system includes transmission facilities owned or controlled by the operator. Thus, while broadcast.com could try to become an authorized cable system operator, the FCC or state and local franchise authorities could deny the request based on the fact that broadcast.com does not own or control closed transmission paths.

Based only on the physical configuration of broadcast.com’s proposed service offering, it would be easier to get open video system authority versus cable system authority.

An open video systems is defined as: “A facility consisting of a set of closed transmission paths and associated signal generation, reception and control equipment that is designed to provide cable service which includes video programming and which is provided to multiple subscribers within a community, provided that the Commission has certified that such system complies with [the appropriate regulations.]” Congress was less prescriptive in its definition of what constitutes an open video system and gave the FCC broader authority to promote competition in the multichannel video programming market by encouraging entities to become OVS operators.

The definition of an open video system does not include the same exceptions set forth in the cable system definition. The FCC staff responsible for OVS have stated informally that they interpret the definition broadly and want to give system operators flexibility on how they choose to construct their systems. Thus, the staff stated that they do not believe that it is necessary for an OVS operator to own or control the transmission facilities over which subscribers receive OVS video programming; the OVS operator can make use of third-party facilities.

Service Classification

Next, broadcast.com must determine if its service offering fits the definition of an OVS or cable “service.” In this instance, the FCC’s rules for both OVS and cable service mirror each other: the services are defined as “the one-way transmission to subscribers of video programming, or other programming service; and, subscriber interaction, if any, which is required for the selection or use of such video programming or other programming service.” Video programming is defined as “programming provided by, or generally considered comparable to programming provided by, a television broadcast station; and, “other programming service” is information that a cable operator makes available to all subscribers generally.

Despite the interactive nature of Internet services in general, broadcast.com’s proposed service offering could conform to the definition of cable service, both in terms of the nature of the service to be delivered – a video programming – and the fact that the service will be provided to paying subscribers.

Advantages and Disadvantages of Option 2

The above discussion demonstrates that broadcast.com could make a viable argument that its proposed service offering qualifies as an OVS service. The primary reason for becoming classified as an OVS operator is to improve the ease by which broadcast.com could secure rights to deliver television broadcast programs via the Internet. While such a classification could deliver this benefit, it is important that broadcast.com understand the interplay between the copyright laws providing a statutory license to deliver broadcast services and the federal communications laws that give broadcasters the ability to control who can deliver their signal.

Retransmission Consent and Must-Carry

Federal communications law says that:

[N]o cable system or other multichannel video programming distributor [including OVS] shall retransmit the signal of a broadcast station, or any part thereof, except:

(A) with the express authority of the originating station;

or

(B) in the case of a station electing [must-carry]…

Thus, even though copyright law provides a compulsory license, cable systems and other MVPDs cannot carry a broadcast signal without the consent of the broadcast station except in very limited circumstances.

The way this law works in practice is that a cable system or OVS operator must make capacity on its system available to local television broadcast stations that are licensed to operate in communities covered by the cable system or OVS service territory. The broadcast station then makes an election whether to mandate that the system operator carry its signal under the must-carry laws or to require the cable system to seek retransmission consent. This election process is repeated on a fixed three-year schedule, with the most recent election cycle ending on October 1, 1999.

If the broadcaster chooses must-carry, the process for carriage is relatively straight forward. The OVS operator must ensure that they have capacity to carry the broadcaster’s signal and provide a means for the broadcaster to deliver its signal to the system. In return, the broadcaster must ensure that it provides a good quality signal to the OVS operator. Unless otherwise agreed, the OVS operator must carry the entire broadcast signal, without material degradation.

If broadcaster chooses retransmission consent, then the parties must negotiate carriage terms. While the system operator has obligations to negotiate in good faith and to work to arrive at an agreement, the FCC supports the right of the broadcaster to withhold its consent. Even if the cable system operator wants to carry the broadcaster’s signal, there is no guarantee that it can do so unless the broadcaster agrees.

The only safeguard that protects the system operator is that a broadcaster cannot enter into exclusive carriage agreements with any given MVPD. However, this safeguard does not prevent the broadcaster from deciding that the terms of a retransmission consent agreement are not attractive enough to justify consent. The implication to broadcast.com is that even if it were to go through the process of becoming a cable system or OVS operator, the retransmission consent laws show that the company may still have to negotiate carriage rights and it cannot be certain that broadcasters will ultimately consent.

Having said this, the OVS rules include a loophole that could help broadcast.com in certain communities. On October 1, 1999, all broadcasters had to make their must-carry elections for the three-year period from January 1, 2000 to December 31, 2002. Under the OVS rules, a broadcaster’s election for a cable community applies to OVS systems whose service territory mirrors the cable system community. Consequently, if an NBC affiliate in St. Louis elected must-carry for cable, this election would apply to an OVS service in the same community.

Broadcast.com should identify communities in which it would like to provide OVS service. Once it has compiled this list, it would then be possible to review the most recent round of broadcast elections to identify stations that chose must-carry. Using this approach broadcast.com would be able to avoid negotiating retransmission consent with these stations by relying on the broadcaster’s must-carry election for cable television.

Unfortunately, the FCC no longer keeps a central list of must-carry elections. Therefore, broadcast.com would have to seek this information directly from particular stations or from cable system operators in the targeted community. Broadcast stations are required to place their election materials in the station’s public file. Anyone can go to the station and ask to review the file. Stations may also be willing to provide must-carry election information over the telephone. Similarly, cable system operators must maintain a list of all broadcast entities that have elected must-carry. This list is available for public inspection.

We would be happy to help broadcast.com develop a list of target communities and to gather the relevant must-carry election data.

Regulatory Obligations

As we have pointed out in our previous correspondence, cable system and OVS operators assume a variety of regulatory obligations in return for their authority to operate. Examples include the duty to:

Ensure that the rates, terms, and conditions of carriage are “just and reasonable” and do not “unjustly or unreasonably” discriminate between broadcasters.

Make a set amount of capacity available to programmers that request carriage.

Honor the Sports Exclusivity, Network Non-duplication and Syndicated Exclusivity provisions set forth in the law that protect a broadcaster’s right to be a limited source for certain programming.

This is not a complete list, nor do the obligations apply to cable and OVS operators equally. However, for purposes of this letter, broadcast.com should focus on the first five items on the list, as these are the key obligations imposed on OVS operators.

We understand that broadcast.com could comply with the first four obligations so we will not discuss how they might affect broadcast.com’s proposed offering. The fifth obligation – state and local franchise fees – deserves some additional discussion.

State and local governments have authority to collect franchise fees from OVS operators if they so choose. Franchise fees are generally based on the operator’s gross revenues. Consequently, if broadcast.com decided to become an OVS operator it could be subject to local franchise requirements and forced to pay franchise fees. We want to point out, however, that franchise authority is usually tied to a state or local government’s right to recover the costs associated with managing the use of public rights-of-way. Based on broadcast.com’s proposed service, it would not be constructing any transmission facilities that make use of such rights-of-way, thereby eliminating the basis for franchise authority and fee assessment. Broadcast.com could use this argument as a way of avoiding franchise fee obligations. However, it is possible, if not probable, that this argument would have to be resolved by a court of law. If a legal challenge was mounted against broadcast.com, the decisions discussed below suggest that broadcast.com would have the possibility of a successful defense.

The ECI Case

The Communications Act sets forth the framework for state and local franchise authority over cable service. The courts have found that “cable’s use of public rights-of-way has been the predominant justification for local franchising.” Beach Communications v. FCC, (D.C. Cir. 1992). A more recent FCC decision highlights the analysis that might be applicable to broadcast.com.

ECI provides video programming to subscribers through equipment it owns at both its headend and on a subscriber’s premise. By this arrangement, ECI’s equipment is located solely on private property. In order to deliver content from the headend to the subscriber, ECI leases supertrunking video transport services from Ameritech. Ameritech’s facilities used to provide this service occupy public rights-of-way. Once ECI’s signal leaves its headend, Ameritech controls all the routing of ECI signals until the traffic is delivered to ECI’s equipment at the subscriber’s building. ECI then delivers the signal to its subscriber’s equipment. Because of this arrangement, ECI argued that the facilities that it owns or controls do not constitute a cable system and the Ameritech facilities used to deliver signals to ECI’s equipment are not managed, owned or controlled by ECI. Therefore, ECI believed that it was not a cable operator subject to Title VI of the Communication Act.

The FCC agreed with ECI’s argument that it is not a cable operator. While the Commission found that ECI provides cable service to its subscribers, it does not fit the definition of a cable operator because ECI relies on Ameritech’s use of public rights-of-way and does not own or control such facilities.

The FCC was careful to note in its Order that ECI is exempt from cable regulation is based on the specific facts surrounding its business structure and offerings. In particular, the FCC relied on the following facts in making its decision:

There is a separation of ownership between ECI’s headend and subscriber premise facilities and Ameritech’s transmission facilities.

ECI’s facilities are located on private property while Ameritech’s facilities cross public rights-of-way.

ECI and Ameritech have no financial ownership interest in each other and are not affiliated.

Ameritech takes no part in selecting the programming ECI offers to its subscribers.

Once ECI delivers its signal to Ameritech for transport, ECI exercises no control over signal transport except for designating the ultimate delivery point.

Ameritech controls where supertrunking is available and ECI can only offer services to locations that Ameritech has chosen to serve with supertrunking.

Ameritech did not construct the supertrunking facilities at ECI’s request.

The supertrunking facilities owned by Ameritech can be accessed on a common carrier basis by other providers at the same price and on the same terms and conditions applicable to ECI.

ECI promised to allow other programming providers to have access to its service drops at a subscriber’s location.

Thus, the FCC found that ECI’s facilities and Ameritech’s facilities do not constitute a single integrated cable system and ECI is not a cable operator providing service to subscribers through a cable system.

Because, in its current system configuration, ECI’s facilities do not cross public rights-of-way, the FCC found that it is subject to the private cable exemption and need not secure a local franchise in order to provide service. In explaining its finding, the FCC said that a cable operator’s construction in and use of the public rights-of-way is a key underpinning for the franchise requirement. Where an entity relies on the facilities of another company that has an independent right to access public rights-of-way and does not deploy its own facilities in such rights-of-way, the underlying need for a franchise is not present. In this case, ECI relied on Ameritech’s access to the public rights-of-way.

Relying heavily on the FCC’s decision in ECI, a U.S. District Court in Texas held that Southwestern Bell Video Services did not need a franchise in order to deliver video services over a network based on third party supertrunks. The court found:

The rationale for allowing local authorities to require franchises for cable companies that are subject to federal regulation has long been the extensive use that such cable operators make of a locality’s public rights-of-way. Quite simply, local authorities are entitled to compensation (1) for the physical intrusion of a cable operator’s facilities on the public rights-of-way and (2) for the access that a franchise agreement gives the cable operator to those rights-of-way. Accordingly, the FCC has noted that “the dual federal-local jurisdictional approach to regulating cable television service is largely premised on the fact that cable systems necessarily involve extensive physical facilities and substantial construction upon and use of public rights-of-way in the communities they serve.”

Broadcast.com’s proposed service arrangement is analogous to the facts in the ECI and Southwestern Bell cases. Based on the decisions applicable to these entities, it would appear that broadcast.com would have a viable argument in court against any attempt to impose franchise obligations on its OVS offering.

Other Regulatory Issues

Broadcast.com may find that it would be worth accepting the regulatory burdens associated with becoming a national OVS operator if only it could have greater certainty that broadcast stations would actually give transmission consent. One solution would be to encourage and ultimately petition the FCC to change its rules to place some responsibility on broadcast stations to negotiate consent agreements in good faith. The argument might be framed by the concept that when a broadcast station elects retransmission consent, multichannel video service providers should be able to minimally expect that, when the terms are just and reasonable, the broadcaster will in fact grant such consent. Under this scenario, terms would be considered just and reasonable when they are comparable to what the broadcaster has granted to another MVPD. Second, such a rule would further Congress’ goal of promoting competition in the multichannel video industry by encouraging new entrants to provide such services. Finally, it might be argued that because broadcasters make use of free spectrum to deliver their services, it is not unreasonable to require them to allow consumers to have access to programming through alternative media including the internet, especially when copyright law otherwise protects the broadcaster’s interest.

A more aggressive position would be to ask the FCC to mandate that once a broadcaster grants retransmission consent to any MVPD in its market, it must grant consent to all such MVPDs on similar terms. This argument could be based on the rules that prevent broadcasters from entering into exclusive contracts.

Broadcast.com should also consider asking the FCC to clarify whether an entity that does not own or control any transmission facilities used to deliver service to subscribers qualifies as an OVS operator. Such a ruling would allow broadcast.com to know with certainty whether it could become an OVS operator without owning transmission facilities. Broadcast.com would have the option of filing such a request in its own name or could ask McDermott, Will & Emery to file an interpretive ruling request without mention of the Internet or broadcast.com.

Finally broadcast.com should take advantage of the FCC’s liberal visitation policies as a way of creating support and sponsorship for its proposed service offerings. Before making any formal filings, broadcast.com could schedule meetings with key Bureau and Commissioner staff members in order to explore how the FCC might respond if broadcast.com were to seek OVS certification. Broadcast.com could protect its business strategies by formally requesting that the meetings be given confidential treatment.

Option 3: Form Business Alliances with a Satellite Television Service Provider

Summary of Recommendation

Broadcast.com should assess whether it can become distributor of broadcast signals delivered via a satellite carrier by:

President Clinton recently signed into law the Satellite Home Viewer Improvement Act of 1999. The new law allows satellite television providers to deliver local broadcast programming under a statutory license. This gives satellite companies the ability to offer their subscribers the same local broadcast programming historically available through cable television systems. As is the case with cable system and OVS operators, the satellite providers will ultimately become responsible for complying with the must-carry and retransmission consent provisions of the Communications Act. However, the FCC has yet to implement regulations covering these statutory requirements, so an opportunity exists to influence the process through future rulemaking proceedings.

The statutory license allows satellite carriers to deliver local television signals to subscribers in the television station’s market when the transmission is made by a satellite carrier to its subscribers or a distributor that has contracted with the satellite carrier to deliver the transmission to the public. The statute defines a “distributor” as an one that contracts with a satellite carrier to distribute the retransmitted broadcast signal, as a single channel or part of a package, either directly to individual subscribers or through other program distribution entities.

This definition of a distributor is so broad that it could easily apply to an arrangement between broadcast.com and a satellite carrier. Moreover, the option is attractive because broadcast.com could rely on the rights of the satellite carrier instead of having to negotiate rights directly with a broadcaster. Finally, broadcast.com could avoid directly assuming regulatory burdens due to the satellite carrier’s compliance with such obligations. For instance, the satellite provider would have the legal responsibility for ensuring that a broadcaster’s non-duplication request was fulfill before sending the broadcast feed to broadcast.com. Therefore, broadcast.com would not have to take steps to effect the blackout.

The primary drawback to this arrangement is that we do not know how the FCC will implement the new statute. The law requires the FCC to initiate a series of rulemakings to adopt regulations that will govern the relationship between satellite carriers and broadcasters. The first proceeding, which must be initiated by January 13, 2000, will address retransmission consent between broadcasters and satellite carriers. It is likely that the distributor role will be raised in this proceeding and parties will be given a chance to define what a distributor is allowed to do and under what terms. In order for the distributor option to be attractive to broadcast.com, it is important that the FCC be persuaded to adopt a broad definition of a distributor.

Even though the FCC has not yet implemented any rules, satellite carriers have already begun negotiating carriage agreements with broadcasters. It is possible that the terms of such agreements could limit the satellite carrier’s ability to deliver signals through a distributor, including to Internet entities. Thus, broadcast.com may need to start exploring the feasibility of this option immediately so that satellite carriers do not agree to terms now that could foreclose a relationship with broadcast.com.

-o0o-

We hope that this memorandum provides you with some initial ideas on how broadcast.com could expand its service offerings. As always, we will continue to explore additional options. In the meantime, if you have any questions about the content of this letter, please feel free to call me.

***

And about 6 weeks later after the first memo in this post, this is the review of a hearing related to the same topic

McDermott, Will & Emery

Washington, D.C.

memorandum

On February 16, 2000, the House Subcommittee on Telecommunications Trade & Consumer Protection held a hearing on compulsory copyright licenses for webcasters. Two DiMA members, Alex Alben of Real Networks and Bob Roback of Launch Media, testified on behalf of the Internet media industry. Ian McCallum testified on behalf of iCraveTV – another member of the industry. In addition, Jack Valenti testified on behalf of the Motion Picture Association of America and the newly founded “Copyright Assembly,” Paul Kapowicz of LIN TV and Stuart Beck of Granite Broadcasting testified on behalf of local television stations, and University of Oklahoma President David Boren testified on behalf of the NCAA. Finally, Peter Jaszi, a professor at American University, testified on copyright licensing in general.

This hearing was a continuation of a debate from last year’s Satellite Home Viewer Act reauthorization proceedings regarding whether webcasters should be able to retransmit television broadcast signals under a statutory copyright license akin to those available for cable and satellite retransmission. While this question has been pondered for the last few years, recent actions by iCraveTV appear to have caused Congress to wonder whether it should or must resolve this issue in the near term.

The general opinion expressed by copyright industries and broadcasters at the hearing was that Congress should not act hastily in enacting webcasting legislation that creates a new compulsory licenses for Internet-based broadcast video services. The Internet media companies also emphasized that similar restraint should be used with regard to any proposed legislation that would explicitly exclude Internet-based services from the existing cable or satellite licensing schemes. However, the underlying basis for these general recommendations highlights the differing positions among the various industry segments.

Local broadcasters testified that they are not against having broadcast signals delivered over the Internet – many are actually putting their content on their own web pages. They do, however, contend that they own their content and should decide who gets to retransmit it and under what terms. More specifically, the broadcasters argued that there are five primary issues that support their conclusion that a webcasting compulsory license is not needed:

Content Control: The broadcasters want to ensure that signal content is not altered and signal quality is not diminished. For instance, broadcasters believe that the small screen and slow delivery speeds associated with the Internet reduce the quality of their product. This, in turn, could diminish the value viewers place on the broadcaster’s service.

Advertising: The broadcasters claim that ISPs might interfere with a broadcaster’s advertising relationships by altering or substituting ads in the broadcast stream or by running banner ads that compete with the ads in the broadcast stream. These actions allegedly might change the value of broadcast advertising opportunities and could harm a station by reducing its revenues.

Localism: Local broadcast stations claim that they provide an important public service by offering programming tailored to local interests (e.g., local news). They are able to do this because advertisers are willing to pay for air time in order to reach consumers in a particular market. If advertisers stop valuing this marketing approach, as might happen if their ads faced competition from web ads or if the ads were not reaching the right consumers (e.g., viewers outside a market), then broadcasters could see reduced ad revenues and may not be able to afford to provide local content. The fact that, according to the witnesses, technology does not appear to exist that can limit television broadcast retransmission via the Internet to a given geographic area allegedly creates a real threat to a broadcaster’s ability to maintain its local focus.

Network Programming: Television stations generally do not have a right to allow others to retransmit network signals over the Internet. Consequently, any Internet compulsory license would have to include an exception for programming the station does not own.

Theft: Like the content providers represented by Mr. Valenti and Mr. Boren, broadcasters are concerned about unauthorized signal redistribution. They argue that the Internet is a global digital medium that allows high quality copies to be easily made and distributed. They allege that this same problem does not exist with satellite or cable television. Consequently, it is reasonable to draw distinctions between cable and satellite television compulsory licensing versus Internet licensing and to thoroughly consider these differences before adopting any legislation governing webcasting.

Mr. Valenti, representing the interests of several content providers, said he is not asking Congress to do anything other than be “cautious and wary about giving a license to anyone.” Mr. Valenti also noted that the existing compulsory licenses have come with a cost to the satellite and cable companies – namely they have to comply with strict copyright and FCC rules that help to maintain the integrity of the content owner’s property (e.g., sports blackout, syndication exclusivity, network nonduplication). Until ISPs can demonstrate that they can control service delivery in a manner that ensures that content is delivered only to certain geographic areas, can protect content from theft or alteration, and can account for distribution in a way that allows content owners to be compensated, Congress should not expand the existing licensing scheme to include Internet services. This sentiment was echoed by the broadcasters and by Mr. Boren.

Thus, the underlying argument from a content provider and broadcast perspective was that Congress should not act because it may upset the current regime.

The Internet industry took a different approach: Congress should not act now because the marketplace is still working itself out, but it is inevitable in the long term that video-based programming, including television, will be made available over the Internet because consumers are demanding this service. So Congress may ultimately be required to act if the content providers, broadcasters and ISPs cannot come to a solution on their own.

Representing the Internet industry perspective, Alex Alben and Bob Roback emphasized that Congress should not adopt policies based on the actions of one Internet company – iCraveTV. They reminded Congress that DiMA’s members have demonstrated their respect for the rights of copyright holders by negotiating transmission rights and by cooperating in past efforts to shape copyright legislation. Furthermore, the Internet industry is not asking for government intervention at this point, but might seek a compulsory license sometime in the future. In the meantime, Congress should not adopt laws that prohibit Internet companies from relying on existing compulsory licenses. In response to a question from Congressman Markey on whether existing licenses actually apply to Internet companies, Alex Alben stated that it is not clear because no ISP has attempted to use them, but if the ISP can demonstrate that it can comply with all the terms and conditions of such licenses then they should be able to benefit from them. Alex Alben and Bob Roback also said it would be unfair to give certain companies access to compulsory licenses and not others merely because the delivery medium (e.g., cable, satellite, wireless or Internet) or subscriber equipment (e.g., TV or computer) differs. Thus, while Internet companies would rather work with broadcasters to reach negotiated agreements, it would be technically and competitively more fair and much more convenient if ISPs had the option of using a compulsory license just as cable and satellite carriers can. Professor Jaszi agreed, pointing out that the best approach is a hybrid model where ISPs can rely on both negotiated and compulsory license agreements.

iCraveTV, the other Internet representative, was more focused on defending the legality of its own business decisions. Relying on the argument that Canadian copyright law does not base the compulsory license right on the technology used and does not require ISPs to receive a broadcaster’s permission before retransmitting signals over the Internet, Mr. McCallum said that iCraveTV did not break the law and is not a pirate. When asked if he broke U.S. copyright laws, Mr. McCallum said that that question is before the courts but it was not iCraveTV’s intention to retransmit signals without proper authorization. Rather, he argued, responsibility for transmissions outside Canada rests with the non-Canadian users, who fraudulently claimed a Canadian area code to access the iCraveTV site. He also said his company will soon have tariff arrangements with Canadian rightsholders that will govern retransmission compensation and is implementing technical solutions that will keep non-Canadian users from accessing U.S. material. He declined to speculate on what Congress should do with regards to copyright compulsory licensing for U.S. webcasting, saying that iCraveTV’s focus is solely on Canada.

The response from the committee members was varied. Several members expressed their support for local broadcasters saying that just as Congress is interested in encouraging the continued development of the Internet, it is also interested in ensuring that any proposed webcasting legislation reflects the important role these broadcasters play in promoting the public interest.

Other committee members said that the current debate raises issues that are similar to those raised by broadcasters when Congress considered making UHF channels available, when Congress created the cable compulsory license and most recently when Congress gave a compulsory license to satellite carriers. In all three instances there were concerns about the demise of free broadcast television. However, broadcast television has survived these changes in the past despite more competition and Congress should be careful not to adopt policies that protect entrenched service providers interested in preserving the status quo at the expense of creating more competition and consumer choice or thwarting Internet growth.

Finally, several members shared their appreciation for the role the Internet currently plays in keeping them apprised of what is going on outside of Washington. Congresswoman Wilson noted that she uses the Internet everyday to get news on what is happening in her district from a local broadcast station in New Mexico. Congressman Markey said he uses the Internet in a similar way and would be happy to be able to watch Boston Red Sox games via the web. Comments such as these suggest that the members recognize the desirability of long-distance availability of local information.

It appeared from comments made by many committee members, as well as the witnesses, that there is an appreciation for the fact that people like being able to receive television programming over the web and that the industry is moving forward at a rapid pace to bring these services to subscribers. While at this point there appears to be a consensus that legislation is not necessary, it also appears inevitable that the boundaries of the existing copyright licenses will be challenged and that Congress could be forced to intervene if the marketplace cannot resolve this debate on its own.

On a related note, Chairman Tauzin said he is also interested in holding hearings on the need for legislation to protect Internet privacy, particularly as it relates to the gathering and exchange of user-specific data without user knowledge or consent.

]]>http://blogmaverick.com/2014/07/19/aero-everything-old-is-new-again/feed/15markcubanhttp://blogmaverick.com/2014/07/19/aero-everything-old-is-new-again/The Idiots Guide to High Frequency Tradinghttp://feedproxy.google.com/~r/mavsblogmaverick/~3/wIhfv-xf4P4/
http://blogmaverick.com/2014/04/03/the-idiots-guide-to-high-frequency-trading/#commentsThu, 03 Apr 2014 20:28:16 +0000http://blogmaverick.com/?p=2217]]>First, let me say what you read here is going to be wrong in several ways. HFT covers such a wide path of trading that different parties participate or are impacted in different ways. I wanted to put this out there as a starting point . Hopefully the comments will help further educate us all

1. Electronic trading is part of HFT, but not all electronic trading is high frequency trading.

Trading equities and other financial instruments has been around for a long time. it is Electronic Trading that has lead to far smaller spreads and lower actual trading costs from your broker. Very often HFT companies take credit for reducing spreads. They did not. Electronic trading did.

We all trade electronically now. It’s no big deal

2. Speed is not a problem

People like to look at the speed of trading as the problem. It is not. We have had a need for speed since the first stock quotes were communicated cross country via telegraph. The search for speed has been never ending. While i dont think co location and sub second trading adds value to the market, it does NOT create problems for the market

3. There has always been a delta in speed of trading.

From the days of the aforementioned telegraph to sub milisecond trading not everyone has traded at the same speed. You may trade stocks on a 100mbs broadband connection that is faster than your neighbors dial up connection. That delta in speed gives you faster information to news, information, research, getting quotes and getting your trades to your broker faster.

The same applies to brokers, banks and HFT. THey compete to get the fastest possible speed. Again the speed is not a problem.

4. So what has changed ? What is the problem

What has changed is this. In the past people used their speed advantages to trade their own portfolios. They knew they had an advantage with faster information or placing of trades and they used it to buy and own stocks. If only for hours. That is acceptable. The market is very darwinian. If you were able to figure out how to leverage the speed to buy and sell stocks that you took ownership of , more power to you. If you day traded in 1999 because you could see movement in stocks faster than the guy on dial up, and you made money. More power to you.

What changed is that the exchanges both delivered information faster to those who paid for the right AND ALSO gave them the ability via order types where the faster traders were guaranteed the right to jump in front of all those who were slower (Traders feel free to challenge me on this) . Not only that , they were able to use algorithms to see activity and/or directly see quotes from all those who were even milliseconds slower.

With these changes the fastest players were now able to make money simply because they were the fastest traders. They didn’t care what they traded. They realized they could make money on what is called Latency Arbitrage. You make money by being the fastest and taking advantage of slower traders.

It didn’t matter what exchanges the trades were on, or if they were across exchanges. If they were faster and were able to see or anticipate the slower trades they could profit from it.

This is where the problems start.

If you have the fastest access to information and the exchanges have given you incentives to jump in front of those users and make trades by paying you for any volume you create (maker/taker), then you can use that combination to make trades that you are pretty much GUARANTEED TO MAKE A PROFIT on.

So basically, the fastest players, who have spent billions of dollars in aggregate to get the fastest possible access are using that speed to jump to the front of the trading line. They get to see , either directly or algorithmically the trades that are coming in to the market.

When I say algorithmically, it means that firms are using their speed and their brainpower to take as many data points as they can use to predict what trades will happen next. This isn’t easy to do. It is very hard. It takes very smart people. If you create winning algorithms that can anticipate/predict what will happen in the next milliseconds in markets/equities, you will make millions of dollars a year. (Note:not all algorithms are bad. Algorithms are just functions. What matters is what their intent is and how they are used)

These algorithms take any number of data points to direct where and what to buy and sell and they do it as quickly as they can. Speed of processing is also an issue. To the point that there are specialty CPUs being used to process instruction sets. In simple terms, as fast as we possibly can, if we think this is going to happen, then do that.

The output of the algorithms , the This Then That creates the trade (again this is a simplification, im open to better examples) which creates a profit of some relatively small amount. When you do this millions of times a day, that totals up to real money . IMHO, this is the definition of High Frequency Trading. Taking advantage of an advantage in speed and algorithmic processing to jump in front of trades from slower market participants to create small guaranteed wins millions of times a day. A High Frequency of Trades is required to make money.

There in lies the problem. This is where the game is rigged.

If you know that by getting to the front of the line you are able to see or anticipate some material number of the trades that are about to happen, you are GUARANTEED to make a profit. What is the definition of a rigged market ? When you are guaranteed to make a profit. In casino terms, the trader who owns the front of the line is the house. The house always wins.

So when Michael Lewis and others talk about the stock market being rigged, this is what they are talking about. You can’t say the ENTIRE stock market is rigged, but you can say that for those equities/indexs where HFT plays, the game is rigged so that the fastest,smart players are guaranteed to make money.

6. Is this bad for individual investors ?

If you buy and sell stocks, why should you care if someone takes advantage of their investment in speed to make a few pennies from you ? You decide, but here is what you need to know:

a. Billions of dollars has been spent to get to the front of the line. All of those traders who invested in speed and expensive algorithm writers need to get a return on their investment. They do so by jumping in front of your trade and scalping just a little bit. What would happen if they weren’t there ? There is a good chance that whatever profit they made by jumping in front of your trade would go to you or your broker/banker.

b. If you trade in small stocks, this doesn’t impact small stock trades. HFT doesn’t deal with low volume stocks. By definition they need to do a High Frequency of Trades. If the stocks you buy or sell don’t have volume (i dont know what the minimum amount of volume is), then they aren’t messing with your stocks

c. Is this a problem of ethics to you and other investors ? If you believe that investors will turn away from the market because they feel that it is ethically wrong for any part of the market to offer a select few participants a guaranteed way to make money, then it could create significant out flows of investors cash which could impact your net worth. IMHO, this is why Schwab and other brokers that deal with retail investors are concerned. They could lose customers who think Schwab, etc can’t keep up with other brokers or are not routing their orders as efficiently as others.

7. Are There Systemic Risks That Result From All of This.

The simple answer is that I personally believe that without question the answer is YES. Why ?

If you know that a game is rigged AND that it is LEGAL to participate in this rigged game, would you do everything possible to participate if you could ?

Of course you would. But this isn’t a new phenomena. The battle to capture all of this guaranteed money has been going on for several years now. And what has happened is very darwinian. The smarter players have risen to the top. They are capturing much of the loot. It truly is an arms race. More speed gives you more slots at the front of the lines. So more money is being spent on speed.

Money is also being spent on algorithms. You need the best and brightest in order to write algorithms that make you money. You also need to know how to influence markets in order to give your algorithms the best chance to succeed. There is a problem in the markets known as quote stuffing. This is where HFT create quotes that are supposed to trick other algorithms , traders, investors into believing their is a true order available to be hit. In reality those are not real orders. They are decoys. Rather than letting anyone hit the order, because they are faster than everyone else, they can see your intent to hit the order or your reaction either directly or algorithmically to the quote and take action. And not only that, it creates such a huge volume of information flow that it makes it more expensive for everyone else to process that information, which in turn slows them down and puts them further at a disadvantage.

IMHO, this isn’t fair. It isn’t a real intent. At it’s heart it is a FRAUD ON THE MARKET. There was never an intent to execute a trade. It is there merely to deceive.

But Order Stuffing is not the only problem.

Everyone in the HFT business wants to get to the front of the line. THey want that guaranteed money. In order to get there HFT not only uses speed, but they use algorithms and other tools (feel free to provide more info here HFT folks) to try to influence other algorithms. It takes a certain amount of arrogance to be good at HFT. If you think you can out think other HFT firms you are going to try to trick them into taking actions that cause their algorithms to not trade or to make bad trades. It’s analogous to great poker players vs the rest of us.

What we don’t know is just how far afield HFT firms and their algorithms will go to get to the front of the line. There is a moral hazard involved. Will they take risks knowing that if they fail they may lose their money but the results could also have systemic implications ?. We saw what happened with the Flash Crash. Is there any way we can prevent the same thing from happening again ? I don’t think so. Is it possible that something far worse could happen ? I have no idea. And neither does anyone else

It is this lack of ability to quantify risks that creates a huge cost for all of us. Warren Buffet called derivatives weapons of mass destruction because he had and has no idea what the potential negative impact of a bad actor could be. The same problem applies with HFT. How do we pay for that risk ? And when ?

When you have HFT algorithms fighting to get to the front of the line to get that guaranteed money , who knows to what extent they will take risks and what they impact will be not only on our US Equities Markets, but also currencies, foreign markets and ? ? ?

What about what HFT players are doing right now outside of US markets ? All markets are correlated at some level. Problems outside the US could create huge problems for us here.

IMHO, there are real systemic issues at play.

8. So Why are some of the Big Banks and Funds not screaming bloody murder ?

To use a black jack analogy , its because they know how to count cards. They have the resources to figure out how to match the fastest HFT firms in their trading speeds. They can afford to buy the speed or they can partner with those that can. They also have the brainpower to figure out generically how the algorithms work and where they are scalping their profits. By knowing this they can avoid it. And because they have the brain power to figure this out, they can actually use HFT to their advantage from time to time. Where they can see HFT at work, they can feed them trades which provides some real liquidity as opposed to volume.

The next point of course is that if the big guys can do it , and the little guys can let the big guys manage their money , shouldn’t we all just shut up and work with them ? Of course not. We shouldn’t have to invest with only the biggest firms to avoid some of the risks of HFT. We should be able to make our decisions as investors to work with those that give us the best support in making investments. Not those who have the best solution to outsmarting HFT.

But more importantly, even the biggest and smartest of traders , those who can see and anticipate the HFT firms actions can’t account for the actions of bad actors. They can’t keep up with the arms race to get to the front of the line. Its not their core competency. It is a problem for them, but they also know that by being able to deal with it better than their peers, it gives them a selling advantage. “We can deal with HFT no problem”. So they aren’t screaming bloody murder.

9. So My Conclusion ?

IMHO, it’s not worth the risk. I know why there is HFT. I just don’t see why we let it continue. It adds no value. But if it does continue, then we should require that all ALGORITHMIC players to register their Algorithms. While I’m not a fan of the SEC, they do have smart players at their market structure group. (the value of going to SEC Speaks :). While having copies of the algorithms locked up at the SEC wont prevent a market collapse/meltdown, at least we can reverse engineer it if it happens.

I know this sounds stupid on its face. Reverse engineer a collapse ? But that may be a better solution than expecting the SEC to figure out how to regulate and pre empt a market crash

10…FINAL FINAL THOUGHTS

i wrote this in about 2 hours. Not because i thought it would be definitive or correct. I expect to get ABSOLUTELY CRUSHED on many points here. But there is so little knowledge and understanding of what is going on with HFT, that I believed that someone needed to start the conversation

]]>http://blogmaverick.com/2014/04/03/the-idiots-guide-to-high-frequency-trading/feed/134markcubanhttp://blogmaverick.com/2014/04/03/the-idiots-guide-to-high-frequency-trading/High Frequency Trading, and Proof that the SEC Approach to Insider Trading is Completely Wronghttp://feedproxy.google.com/~r/mavsblogmaverick/~3/5GM-61hgpLY/
http://blogmaverick.com/2014/04/02/high-frequency-trading-and-proof-that-the-sec-approach-to-insider-trading-is-completely-wrong/#commentsWed, 02 Apr 2014 14:05:04 +0000http://blogmaverick.com/?p=2215]]>Got to love Mary Jo White, the Chairwoman of the SEC. While Michael Lewis’s book Flash Boys was getting all the headlines and was the topic of some of the best television on CNBC, ever, Ms White used the firestorm to ask for more money for the SEC.

Shocking ? The only shock would be if she didn’t use any occasion the SEC was in the public eye to ask for more money. It is unfortunate because there is no greater waste of money than what the SEC spends trying to enforce insider trading laws.

Let me give you some examples of just how poorly the SEC manages our tax dollars when it comes to insider trading:

1. Did you hear the one about Gary and Clif of the Florida East Coast Railroad ? Gary and Clif noticed that there were a lot of tours of the company being given to guys in suits. So they guessed that something good was going on and decided to invest in stock of the company. They guessed right. The SEC sued for insider trading. THe SEC lost. How many millions of dollars of taxpayer money were wasted ?

2. In the case of SEC vs Schvacho the SEC charged Schvacho with using inside information he obtained from a friend who was CEO of a company he traded in. Both parties said under oath that they never discussed the stock and no Material Information about the company ever changed hands. This is what the judge had to say about the case ““And I would note, as I said before, that it’s unfortunate that this issue has come up, and while Mary Jo White wants to try more cases, I hope that she impresses upon especially counsel in her agency that the goal here is for a just result and not just for a result.” The SEC lost. How many millions of dollars of taxpayer money were wasted ?

The SEC works hard to expand the definition of insider trading. The first question I have is why? What does it accomplish ? I have no problem with classic insider trading being illegal. If you are the CEO or director of a company and you use information you have access to to trade and profit and gain in some manner, that is wrong. The Department of Justice does a good job of going after criminals who inside trade. The SEC doesn’t. Leave Insider Trading to the Justice Department.

The SEC on the other hand deals with civil litigation. They have stated many times that the goal is to increase investor confidence in the markets. Which leads to the question of whether or not these efforts have resulted in increased investor confidence ? Not according to every poll I have seen. Not according to anyone I have ever talked to. Investor confidence continues to decrease. Despite this, the SEC continues to think Insider Trading enforcement is the way to increase confidence in the markets. It is not.

The absolute fact is that investors DO NOT CARE ABOUT INSIDER TRADING and DO NOT USE IT AS PROXY FOR WHETHER OR NOT THE MARKETS ARE FAIR

How do i know this is a fact ? By looking at reality. Ask yourself the following questions:

How many trillions of dollars are invested in global equities and markets outside of the United States ? Have you ever invested in global markets ?

Before you or anyone you know ever invested in foreign markets, or have you ever read or heard about anyone EVER checking the insider trading laws of a given country before making an investment ?

Have you or anyone you know or read about ever sold global equities because of lax enforcement of insider trading laws in that country ?

I have asked these questions at numerous conferences and events, no one has ever said yes. Ever.

The point being that investors don’t care about Insider Trading laws. They don’t use it as investment criteria. They don’t have concerns about it. Its not an issue. Trillions of dollars are invested globally without concern for insider trading, yet the SEC continues to bring ridiculous enforcement actions as a proxy for investor confidence. It is a waste of taxpayer money.

THE SEC SHOULD GET COMPLETELY OUT OF THE INSIDER TRADING BUSINESS.

They waste taxpayer money going after the Gary and Clif’s of the world in what appears to be nothing more than a full employment act for current, future and former SEC attorneys. They should be concerned with the issues that truly impact investor confidence. The things that matter. Finding Ponzi schemes, penny stock frauds, Market Structure Issues like HFT. If it adds risk and costs to the entire market, deal with it. Investors are concerned with actions, transactions and risks that can cause them to lose all of their money. Non Criminal Insider Trading is not one of those things. Right now its just a waste of taxpayer money. Money that the SEC says it doesn’t have enough of.

Leave insider trading to the Justice Department. Take all that money that the SEC wastes on insider trading civil litigation and put it to good use. There are smart people at the SEC , lets get them working on smart things that truly impact investor confidence.

What do you think ? Am I right , wrong ? Missing something ? Let me know your thoughts in the comments section

]]>http://blogmaverick.com/2014/04/02/high-frequency-trading-and-proof-that-the-sec-approach-to-insider-trading-is-completely-wrong/feed/57markcubanhttp://blogmaverick.com/2014/04/02/high-frequency-trading-and-proof-that-the-sec-approach-to-insider-trading-is-completely-wrong/The Back to the Future Arbitrage of Silicon Valley and what it will take to beat ithttp://feedproxy.google.com/~r/mavsblogmaverick/~3/icGx-Z5pTSY/
http://blogmaverick.com/2014/03/19/the-back-to-the-future-arbitrage-of-silicon-valley-and-what-it-will-take-to-beat-it/#commentsWed, 19 Mar 2014 17:05:29 +0000http://blogmaverick.com/?p=2210]]>I’m not a huge fan of Silicon Valley. It reminds me so much of Hollywood and the movie and TV industry.

In Hollywood every one will talk and listen to you about your project. But while they are standing there, right in front of you, they are not looking at you. They are looking past you to the next project where they can raise/sell more. Where they can be a bigger star. There is always a bigger fish. Who ever is standing in front of them is hopefully just the bait.

Silicon Valley has become the exact same thing these days. No one wants to literally start from scratch in a garage and build something. No one wants to bootstrap a business to profitability. Those are such archaic notions these days.

Like Hollywood, today’s nouveau entrepreneurs are looking past the pitch right in front of them to the next source of capital who will pay a higher valuation. Or if they are discussing a job, they are looking past the interviewer in front of them, already contemplating whether or not the stock options they get in this company will match the value on exit of the next gig they could get.

In essence start up employees are marking to market the stock options they haven’t earned yet against the options they haven’t yet received in companies they haven’t yet heard of . It’s the Back to the Future arbitrage. Welcome to Silicon Valley.

In silicon valley it seems like anyone who went to Cal or Stanford feels like they deserve a minimum startup valuation of 8mm dollars or more. Why ? Seriously ? Why ? Because they went to Cal or Stanford. That’s why. It is one of the key reasons many folks feel like there is a bubble in Silicon Valley. The starting points of valuations are crazy.

I too was of the opinion that valuations were in a bubble. I am no longer of that opinion ? Because I was slow it took me a bit to come around to fully understanding what Silicon Valley does best.

Silicon Valley as a source of capital is no better or worse than any other big city. There are plenty of sources of capital everywhere. Yes, they may be better at writing 40mm dollar checks to startups (Color anyone ? ). But start up capital is not their secret sauce.

What Silicon Valley does better than anyone is create exits. They know how to get people who they have made money for to turn over a lot of that money to buy the companies they have invested in. They know how to put on a show to get a company to an IPO. They know how to go out and get hundreds of millions of dollars to bridge companies with 10s of millions in revenues to their IPO and more importantly to make sure the IPO happens.

So if you want your new tech corridor to play in the big leagues with Silicon Valley and its VCs , don’t stress about capital for entrepreneurs to create companies. Stress about capital that will buy provide exits for companies or that can get them to a liquidity creating IPO.

And it doesn’t have to be billion dollar exits. Millions. Tens of Millions. Small IPOs. If you can help enough companies get to capital that takes them to the big leagues or gives them an exit, it will be like financial gravity. It will pull entrepreneurs to you.

So if you want to be the next Silicon Valley, don’t promote the startups you have in your city/state. Many of them are going to go out of business before the ads hit or the conferences happen. Brag about the exits and how there is capital waiting for amazing entrepreneurs to reach their goals.

What changed ? First of all the IPO market is finally starting to open up a tiny bit for tech deals that raise under 50mm dollars and are not “hot” companies or household names. 8mm vs any IPO is still a good thing.

]]>http://blogmaverick.com/2014/03/19/the-back-to-the-future-arbitrage-of-silicon-valley-and-what-it-will-take-to-beat-it/feed/50markcubanhttp://blogmaverick.com/2014/03/19/the-back-to-the-future-arbitrage-of-silicon-valley-and-what-it-will-take-to-beat-it/My 2 cents on Sports Marketing and what I learned from SMU Basketball this weekhttp://feedproxy.google.com/~r/mavsblogmaverick/~3/_RGU9-fnV1U/
http://blogmaverick.com/2014/02/23/my-2-cents-on-sports-marketing-and-what-i-learned-from-smu-basketball-this-week/#commentsSun, 23 Feb 2014 17:46:00 +0000http://blogmaverick.com/?p=2198]]>I had the pleasure of going to an SMU Basketball game this past week. It wasn’t a huge game from a standings perspective. It wasn’t a big rivalry game. It wasn’t a game between 2 powerhouse teams. It was an important game as every game is for an up and coming team like SMU. But there was no one outside the two teams that were really paying attention to the outcome. Bottom line, it was a game on the schedule.

It was a game on the schedule for every one but SMU basketball fans. For SMU basketball fans it was their chance to show off to any and all newcomers who walked into the gym. President Bush (43) was there. Dejuan Blair, Jae Crowder, Casey Smith and others from the Mavs were there (I had no idea they were going to be there). I ran into friends I hadn’t seen in a while. Mavs season ticket holders. It was a fun night to see and be seen. All in an arena that sits 7k .

I love watching any basketball game where I want a team to win (SMU), but will still sleep well if they don’t. I truly get to be a fan. (And no, I don’t scream at the refs. Thats for Mavs games only !). As I watched the game and people came up to me they all asked the same question. They didn’t ask me what I thought of the team and how it was playing. They didn’t ask me what I thought of the coach, Hall of Famer Larry Brown (although the media did ask me about him ). They didn’t ask me about the pro prospects of any player on either team. They didn’t ask me if I thought the team “Played basketball the right way”, a Coach Brown hallmark. They all asked me what I thought about the atmosphere at the arena.

They all wanted confirmation that this was truly a fun atmosphere. That it was now fun to go to an SMU game. They had a student section that was standing, yelling , taunting and cheering. Loudly. Continuously. They had fans that chanted defense. They went nuts as SMU broke open a tight game when their point guard came alive and starting hitting big shots.

Atmosphere. The electricity you feel when you walk into an arena. The uncertainty and anticipation of what will happen before , during and after the game, and most importantly the communal feelings that can only happen when thousands , if not tens of thousands of people share their emotions. That is what makes going to a game special and the smart people at SMU knew it.

There were no special apps that some programming whiz at SMU created. Nor was anyone asking for advanced stats. There was not a single consideration for any unique technology anywhere that I could see. None was suggested or presented to me. There were promos and replays and stats on the high def jumbotron. No one complained that it wasn’t enough.

While I saw plenty of instagrammed pictures from the game, they all seemed to come from before and after the game. The entire time the student section was standing up cheering I looked for phones. Was anyone using one ? Were they holding them up like they might do at a concert to get footage ? Nope. It’s hard to look at your phone or hold it up when you are clapping, stomping, screaming and pointing the entire time

Everyone in that arena knew exactly what was going on. They knew what the Seahawks fans knew. They knew what Mavs fans know. They know that they are not just observers, they are participants. Teams take pride in their “6th man” or their “12th man”. The fans that cheer them on and provide energy to help them rally through fatigue. The only people who take more pride than the teams in their 6th man are the fans themselves.

So how can sports marketers learn from all of this ? Here are some guidelines.

1. Know where your team is in their “lifecycle”.

Not every team is up and coming ala SMU. Not every team only has to fill 7k seats. When a team is first turning the corner, fans tend to not trust it. They expect that their team will revert to their past . I know it drives everyone in pro sports crazy when their team finally does well and fans don’t immediately respond. It is easier to engage fans when the team is turning a corner and winning is new, but you have to work hard at selling the fun of coming to an arena. The more seats you have to sell, the harder you have to work. Fans want a reason to get out of the house and have fun. But they are not going to find you. You have to find them.

If your team finds itself struggling, or if its expected to win you are in the same boat. Your hardcore fans are going to come. But you have to work harder than ever before to create value for you fans. It is during these times, when you can’t control what happens on the court, that you have to work hard to improve the game experience. Not by providing apps or stats. Fans who like those things know where to get them from other sources already. Not by focusing on creating online communities. Online communities are like talk radio. The same 200 people call and participate in both.

You have to invest in things that are universally fun for your customers and prospects. EVERYONE remembers their first game. EVERY parent gets unlimited joy from watching their child enjoy a sporting event. You have to make sure that the entertainment that you provide is not only family friendly, but also engaging for all the 6 to 12 year olds in the audience. If you think those kids care about basketball you are delusional. If you think those parents care more about basketball than keeping their kids entertained for 2 hours, you are delusional and should quit your job immediately. All you have to do is remember this – EVERYONE STANDS UP FOR T SHIRTS.

2. Know who your long time fans/customers are.

The delta between sell out and empty is typically 5k fans. You have to know who your ongoing season ticket holders are and respect and appreciate them. You can not do enough to reward them. It is hard to personally respond to 5k or more account holders, but it is something you have to work at. The greater the renewal rate the fewer the tickets you have to sell next year. Fans know when you care. You can’t fake it. It is hard work, but it has to be done. Know your customers and treat them like gold

3. Price to the market, not to maximize revenue.

The sports industry is changing. TV is becoming a growing revenue source while ticket sales are a declining percentage of total revenues of TV sports. IMHO, it is far more important to know the price points that will enable you to fill the arena than to know the price points that will max out your total revenue. Why ? Because winning matters. It is important to have fans in the stands. They impact your winning percentage. And personally, I believe that winning increases long term profitability.

It is also because fans know the pricing trends of your tickets better than you do. THey know how to use travel sites to get best pricing. They know how to use ticket sites to get best pricing. Teams try to be democratic when it comes to game pricing. Thats an inefficiency that some fans and many ticket brokers know how to take advantage of. We hired a full time Data Analyst to continuously examine and review online pricing for us. It has resulted in us changing pricing for 7k season tickets for this coming year.

The market told us that for season tickets we need to price to the current actual pricing market in order to attract new season ticket customers and to maximize our season ticket renewals. We paid attention . We did it only for season tickets because those are the tickets we have to price in anticipation of the next season. Our hope is that for single game tickets the game experience, our team performance and big games will push our prices even higher and make our season tickets and even more attractive value .

4. Fans buy tickets where they like to buy them

The Mavs have found that some of our customers prefer to buy from a given secondary provider than from our site. They have a credit card set up there. They buy not just Mavs, but other Dallas teams, concerts and other events from a single source. That convenience, from their perspective make it a better choice. Yes, we try to offer better service, premium value, etc. But just like I buy from Amazon just because that is where I buy most of my stuff from, some fans have a preferred source of tickets. You have to be there and make it easy for them to buy.

5. Selling is the most important job at a team

Everyone majors in sports marketing. There is no more worthless major. Every school seems to have a major in sports management . Why do the schools and kids think that across the tens of thousands of graduates from these programs there is going to be a job than even comes close to paying off their student loans. Do the math.

Lets say there are 120 top pro teams. This article says there are about 12k sports marketing grads each year. The competition for jobs at pro teams is so brutal that we don’t have to pay much. Yet schools keep signing up kids. If schools want to have any value to sports teams they should offer degrees in Sales. Not sports sales. Just sales. Teach kids to sell and they can get jobs anywhere anytime. Teach kids sports management and you improve their chances of getting a job at Fridays.

At the Mavs we value customer satisfaction and sales. We want you to have an amazing time at a game. We want our advertiser/sponsors to get amazing value from their Mavs partnerships. We want to have enough great salespeople to reach out and communicate all of the above. Every team can not have enough great salespeople.

6. Spend money on fun.

No team is going to go undefeated every year. You have to make sure that even during games that don’t go the way of the home team that your fans feel like you are doing all you can to entertain them. At the Mavs we spend a small fortune on entertaining videos and in game entertainment. From the Mavs Maniaacs to special half time shows, to Seats for Soldiers, we want our Mavs games to be special occasions. We NEVER cut corners on in game entertainment. In fact we probably spend more on in game video and entertainment than the rest of the NBA combined.

If you have a limited budget and the choice is between fun or anything else, choose fun every time.

I decided to update my thoughts on sports marketing after a great experience at the SMU game and being part of this very condensed Businessweek article . The article was a response to 2 blog posts I had written on the topic in 2010 and 2011 and included a counter argument from the owner of the Sacramento Kings. To make up for the article’s brevity, I have included my entire response to the reporter’s questions below

From the reporter:

Hi Mark,

I am working on a story for Bloomberg Businessweek ahead of the All-Star Tech Summit on Friday about what fans what from mobile technology in-arena. The idea is to dig a little deeper into the contrast between your thinking and that of Vivek Ranadive that came up in this Wired story:

I’ve spoken with Vivek already and would like to get you response to some of what he said. There are basically two parts to his argument. The first is that there is a generational shift happening in consumer habits with mobile and, like it or not, the cohort coming of age now will be checking their mobile screens constantly, including while they are at basketball games and other live events. Not to try to serve them is to fail to deal with reality. As he put it, “the fact is Cuban’s kids are looking at their cell phones 300 or 400 times a day. That’s what they are going to do.”

The second part of his argument is that, if you create the right mobile experience, it is not a distraction but an enhancement. It not only makes the experience more efficient (using a phone to have a hot dog delivered to your seat saves time) but richer. Ranadive: “I completely reject the notion that a fan looking at his mobile device is not an engaged fan. I would argue that I look at my device and I am more engaged because I want to know play by play, I want to know every metric. I want to know everything that is going on.” He believes, with the analysis of his customers and their habits that Tibco allows, he can build a tailored experience that fans will want and appreciate. “Mark’s a very smart guy obviously and he’s done amazing things,” he says, “but I completely disagree on this. I think that it adds to the experience and it’s a fact of life.” And fans that want to opt out, of course, still can.

He also joked that he looks forward to getting a picture of your mobile habits when the Mavericks come to play the Kings.

Is Ranadive falling into the “lookdown trap?” What do you think fans want from an in-arena experience? Any and all comment or response from you is appreciated.

My response:

When i first got t0 the nba in 2000 i felt the same way as vivek does today. we had the first wired arena. Then i learned what our product really is and why people come to games. It hasn’t changed.

Tell him to watch what happens at college games. Tell him to watch a Duke or Pitt basketball game. kids are jumping up and down. They are participating. Look at event driven entertainment like tough mudder. go to a fun wedding. People are looking for reasons to put down their devices. There is no shortage of reasons for people to use their devices. They want reasons to not use them. That is why I’m investing in eventized entertainment like LA Slayride. that’s why attendance is going up.

No question people use their phones and devices at games, but they use them when they are bored. They don’t want more reasons to use them. They want fewer

With all due respect to vivek, the nba isn’t cricket. cricket is boring and there is a ton of down time. The nba doesn’t have a lot of down time. and during that downtime it is our job at the mavs to create entertainment that makes people forget to check their phones. And if you really want to piss off a parent who brought their 10 year old that doesn’t have a phone and the parent doesn’t want them to have a phone, push the use of a phone and make the kid feel like he or she is missing something !

People come to games because they want unique experiences. no one remembers the shooting percentage of their favorite players. They don’t remember jump shots or dunks. They remember who they are with. They remember how they feel.

They also remember the energy in the arena. what makes Sacramento special is that their fans take pride in being loud. They work hard at it. It’s tough to clap when you have a device in your hand. it’s tough to yell when you are talking on your phone. think the seahawks 12th man would be a point of pride if they asked them to tweet rather than blow out each others eardrums ?

Sure fans will always use devices. And yes its smart to remove the friction in any business process, but you have to understand what makes going to an nba game unique. it’s the energy. it’s the participation , it’s being the 6th man and supporting your team. its high fiving or hugging the person. next to you that you dont know, because your team just hit a big shot . Most importantly it’s the look on the face of your child , or your date and the everlasting memories that are created from games. Doesn’t everyone remember their first game with a parent ? Has anyone in the past 5 years ever supplemented their memory of that event with a device mention ?

The mavs use as much if not more tech than anyone. But we use it in creating advanced animations that we premiere on our huge high def screen in the arena and post and promote to kids on youtube and our website. Look at the. mavs website and compare It to any other team. We always look to push the tech envelope where it makes us more valuable to our fans and customers

We use technology to tell people of all ages what they are missing when they are not at a game. Not to remind them that they can do the same stuff at home on their phones while watching the game on tv